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Why Cruise Ship Woes Sank the Stock Market Today

By Dan Caplinger – Updated Jun 17, 2020 at 8:08PM

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Wednesday was the end of a winning streak for Wall Street.

The stock market lost ground on Wednesday, although the declines weren't universal. As we've seen several times recently, the Nasdaq Composite managed to overcome new fears about the coronavirus pandemic, eking out a small gain. But those concerns were enough to send the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC -1.02%) to modest losses for the day.

Today's stock market


Percentage Change (Decline)

Point Change




S&P 500



Nasdaq Composite



Data source: Yahoo! Finance.

Among the worst performers on Wednesday were cruise ship stocks, which have been volatile lately. Norwegian Cruise Line Holdings (NCLH 0.53%), Royal Caribbean Cruises (RCL 1.26%), and Carnival (CCL -6.06%) were all down between 6.5% and 8.5% today. The major worry among shareholders is that their ships won't be able to return to sea as soon as many had started to hope.

Norwegian extends its cruise hold

Investors have been anxious about when cruise ship operators would be able to start taking passengers on trips again. Recent efforts to reopen businesses across the U.S. had led many shareholders in cruise ship stocks to anticipate that cruises would restart sooner rather than later.

But those hopes took a big hit late Tuesday when Norwegian suspended most of its scheduled sailings for August and September. With the exception of Alaska cruises in September, none of the company's Norwegian, Oceania, or Regent Seven Seas branded vessels will make the trips they had planned for that period. Moreover, Norwegian canceled many of its planned cruises in October, including popular destinations in Canada and New England.

White cruise ship at sea with sides painted in bold colors, turning to starboard.

Image source: Norwegian Cruise Line Holdings.

The news was particularly unwelcome because the Centers for Disease Control and Prevention had extended the current no-sail order only through July 24. It's not too late for the CDC to extend that order further, but many had believed that the agency might choose not to do so. Therefore, the idea that Norwegian took it upon itself to lengthen its suspension was noteworthy.

Trouble by land and by sea

In addition to the Norwegian news, investors seem troubled by the recent uptick of COVID-19 cases in key areas for cruise ship operators. In particular, Galveston, Texas, is a popular departure port for cruises, and that state has seen heightened incidence of coronavirus infection resulting from its recent reopening measures. That has some local government officials asking for renewed vigilance with respect to health measures, but Gov. Greg Abbott, a Republican, has resisted calls to allow local control to supersede state-level executive orders.

Florida, another popular state for cruise departures, has also seen COVID-19 cases rise sharply in recent days. The nearly 2,800 new cases reported on June 16 were the most since the pandemic began.

Cruise ship stocks have been favorites among short-term traders looking for big moves, since the share prices have indeed delivered on their promise of high volatility. Yet today's declines show that even as other parts of the economy return to normal, cruise operators still have a long way to go before they fully regain the confidence of potential passengers. Investors looking for cheap value stocks need to understand the risks that cruise stocks have right now.

Dan Caplinger 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.
$44.02 (1.26%) $0.55
Carnival Corporation Stock Quote
Carnival Corporation
$6.98 (-6.06%) $0.45
Norwegian Cruise Line Holdings Stock Quote
Norwegian Cruise Line Holdings
$13.29 (0.53%) $0.07
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$30,273.87 (%)
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,744.52 (-1.02%) $-38.76

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

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