Cruise line stocks Carnival Corporation (CCL -2.35%) (CUK -1.69%), Royal Caribbean (RCL -2.03%), and Norwegian Cruise Line Holdings (NCLH -2.00%) tumbled in tandem yesterday, apparently hurt (we guess?) by investor worries about Major League Baseball's decision to postpone some games. There have been reports of coronavirus infections among baseball players, and so the theory seems to be that it's not a good idea to gather large groups of people together in one single, contagious location.
And yet today, shares of Norwegian Cruise Line are back up 6.6%, Carnival Corporation is rising 4.5%, and Royal Caribbean has regained 3.8%. Why is that?
Of course, there may be another reason that cruise stocks are rising. Last night, Senate Republicans finalized the details of their latest coronavirus stimulus plan: the Health, Economic Assistance, Liability Protection, and Schools or "HEALS" Act, to rival the Health and Economic Recovery Omnibus Emergency Solutions Act or "HEROES" Act that House Democrats passed in May.
The GOP alternative, which Sen. Mitch McConnell calls "tailored and targeted," contains a second round of $1,200 stimulus checks for taxpayers, an extension of unemployment benefits at a reduced level (70% of employed earnings), and continued "paycheck protection" and tax credits to support businesses that are keeping employees on the payroll.
Neither the HEALS Act nor the HEROES Act that preceded it is guaranteed to pass. Indeed, the fact that the HEALS Act contains only about $1 trillion in government stimulus, while the HEROES Act was valued at $3 trillion, tells you just how far apart these two pieces of legislation look to be. That being said, the fact that Republicans have now put an offer on the table raises hopes that additional stimulus legislation may now move forward as the two sides begin their negotiations.
Investors bidding up cruise industry stocks today may simply be thankful that Congress is now sailing out of the doldrums and starting to make headway.