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 (NASDAQ:BKNG) down 4.2%, hotelier Marriott International (NASDAQ:MAR) off 5%, and rental-car company Avis Budget Group (NASDAQ:CAR) crashing 7.8% lower.
I see two big reasons for that -- both are "macro," but only one has the word "coronavirus" in it.
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).
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.