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Why Carnival, Royal Caribbean, and Norwegian Cruise Line Stocks Surged Today

By Joe Tenebruso – Updated Jun 12, 2020 at 6:16PM

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Cruise ship stocks refuse to sink, even as the CDC issues a coronavirus-related warning.

What happened 

Cruise ship stocks rallied on Friday, largely recovering from sharp losses on Thursday. Norwegian Cruise Line Holdings (NCLH -5.84%), Carnival (CCL -7.16%) (CUK -7.53%), and Royal Caribbean (RCL -5.49%) saw their stock prices rise by 19%, 15%, and 12%, respectively.

So what

There wasn't much in the way of positive news for the cruise industry to explain the sharp upward move. Some say it's an army of new day traders on platforms like Robinhood, who are piling into cruise ship stocks and helping to drive their share prices higher. Others say performance-chasing hedge funds are adding to the buying frenzy.

And still others, like CNBC's Jim Cramer, think professional traders might be bidding up the prices of beaten-down stocks in the hope of selling them at even higher prices to Robinhood traders later in the day. 

Stock traders working on a trading desk.

Traders may be driving cruise ship stocks higher. Image source: Getty Images.

Whether you believe any of those theories are true or not, there was some notable news that could have a very real negative effect on the cruise industry.

Now what

The Centers for Disease Control and Prevention (CDC) published a report on Friday showing that 74% of Americans would not feel safe if coronavirus-related social distancing was lifted nationwide. 

Moreover, the CDC warned that social distancing might need to be intensified if the number of COVID-19 cases continues to rise rapidly. "If cases begin to go up again, particularly if they go up dramatically, it's important to recognize that more mitigation efforts such as what were implemented back in March may be needed again," CDC deputy director Jay Butler said. 

That doesn't sound like a CDC that's planning to remove sailing restrictions on cruise ships (which have a history of being prone to COVID-19 outbreaks) anytime soon.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$44.42 (-5.49%) $-2.58
Carnival Corporation Stock Quote
Carnival Corporation
CCL
$8.95 (-7.16%) $0.69
Carnival Corporation Stock Quote
Carnival Corporation
CUK
$7.86 (-7.53%) $0.64
Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
NCLH
$13.55 (-5.84%) $0.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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