Please ensure Javascript is enabled for purposes of website accessibility

Why Marriott International, Booking Holdings, and Avis Budget Stocks Just Crashed

By Rich Smith – Updated Jun 24, 2020 at 2:06PM

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

Coronavirus rears its ugly head once again.

What happened

It's Wednesday, and the stock market is in full retreat (yep, again), with the S&P 500 tumbling 2.2% as of 1 p.m. EDT. Shares of travel-industry-related stocks are taking it especially hard, with shares of reservations specialist Booking Holdings (BKNG -2.13%) down 4.2%, hotelier Marriott International (MAR -0.26%) off 5%, and rental-car company Avis Budget Group (CAR 3.40%) crashing 7.8% lower.

I see two big reasons for that -- both are "macro," but only one has the word "coronavirus" in it.

3-D rendering of virus cells on a red background.

Image source: Getty Images.

So what

Microeconomically speaking, today is kind of a slow news day for Booking, Marriott, and Avis. Since Marriott received the pleasant surprise of a price-target hike yesterday (from Nomura Instinet, which thinks the $86 stock is worth nearly twice that), there's been nary a peep out of Wall Street that might have spooked investors. 

Macroeconomically, however, the market's worried that the Trump Administration is about to start a trade war with Europe. In response to European Commission moves to tax digital transactions and target the profits of U.S. tech companies like Facebook, Google, and Amazon, President Trump's trade negotiators are threatening to raise tariffs on some $3.1 billion in goods imported from France, Germany, Spain, and the U.K. (Trump's also apparently eyeing Canada for a new tariff on aluminum imports, so there's really trade-war risk all around.) 

And that's not the worst of it. Trade wars involving imported goods probably wouldn't affect stocks providing travel services directly. But at the same time as that threat is brewing, we're hearing new reports from the National Institute for Allergies and Infectious Diseases (Dr. Fauci's outfit) that the majority of U.S. states are now reporting rising incidences of coronavirus infection -- the exact opposite of what you'd want to see if we have truly succeeded in "flattening the curve." 

Texas, in particular, just set a new record (for that state) of 5,000 new coronavirus cases reported in a single day, and across the nation, the U.S. now has 2.35 million reported cases -- more than twice the next worst-hit country in the world (which would be Brazil).

Now what

In short, COVID-19 has once again reared its ugly head and sparked fear in the market. Fearful people don't make plans to travel (Booking Holdings). They don't reserve hotel rooms at vacation destinations (Marriott). And for that reason, they don't reserve rental cars to cart themselves around once they reach those destinations (Avis Budget).

This, in a nutshell, is why you're seeing shares of Booking Holdings, Marriott International, and Avis Budget Group stocks going down today.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Amazon, Booking Holdings, and Facebook. The Motley Fool recommends Marriott International and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. 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
Booking Holdings Stock Quote
Booking Holdings
BKNG
$1,643.21 (-2.13%) $-35.71
Avis Budget Group, Inc. Stock Quote
Avis Budget Group, Inc.
CAR
$148.46 (3.40%) $4.88

*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
332%
 
S&P 500 Returns
104%

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.