Please ensure Javascript is enabled for purposes of website accessibility

Why Marriott, Avis, and Azul Stocks Dropped Today

By Rich Smith – Updated Jun 15, 2020 at 1:43PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The coronavirus is still here.

What happened

Stocks tied to the travel industry got trounced in early trading Monday and remained down as of 12:20 p.m. EDT. Currently, shares of hotel chain Marriott International (MAR -0.26%) are down 2.5%, and the stock of car rental company Avis Budget Group (CAR 3.40%) is off 2.2%. In the realm of airlines, Brazilian airline Azul S.A. (AZUL 1.62%) is falling a whopping 8.8%.

There was no bad news affecting any of these three stocks specifically. In the case of Avis Budget, today's announcement that Joe Ferraro has been confirmed as permanent CEO probably qualifies as good news, since it lends investors some certainty about who's running the show.  

Collage of an airplane, coronaviruses, and a world map

Image source: Getty Images.

So what

The coronavirus may be the primary culprit. Over the weekend, 49 new cases prompted authorities in China to close down Beijing's largest wholesale foods market, which they believe was the epicenter of the outbreak. China claimed that it was the first country to have contained coronavirus and was entering into a recovery period. So while 49 cases of COVID-19 may not sound like a large number, it's having a disheartening effect among investors today. 

Meanwhile, spiking COVID-19 cases in the U.S. prompted Utah and Oregon to suspend their reopenings, even as other states pressed forward with unlocking from the Great Lockdown despite rising infections.  

Coronavirus infections in the U.S. are approaching 2.1 million cases (more than 7.9 million worldwide), with more than 115,000 deaths (nearly 434,000 worldwide), according to data from Johns Hopkins University.  

Perhaps worse than the expected second wave of the coronavirus, which was predicted to arrive after the initial contagion has been tamped down, these reports suggest that the first wave never really got under control: not in China, and not here, either. And this in turn suggests that a return of travelers making discretionary purchases such as booking hotel stays, rental cars, or airline flights is not in the cards.

Now what

This is obviously bad news for travel stocks, Marriott, Avis, and Azul among them. This morning, economists at Morgan Stanley indicated that they had actually expected last week's sell-off in stocks (although I don't recall them predicting it) and said it was "healthy." The investment bank then proceeded to predict another 5% to 7% downside, but said the bull market would then "resume in earnest."  

For the time being, however, investors seem to be focusing more on the immediate bad news portending a continuing recession, and on the near-term prospect of continued stock market declines. As for the "resume in earnest" part, investors will believe that when they see it.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Marriott International. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Marriott International, Inc. Stock Quote
Marriott International, Inc.
MAR
$140.14 (-0.26%) $0.37
Avis Budget Group, Inc. Stock Quote
Avis Budget Group, Inc.
CAR
$148.46 (3.40%) $4.88
Azul S.A. Stock Quote
Azul S.A.
AZUL
$8.14 (1.62%) $0.13

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.