Monday was another tale of two stock markets. The Dow Jones Industrial Average (^DJI 0.62%) soared on strength in key industrial, consumer goods, and energy stocks, but losses in the Nasdaq Composite held back the broader market. The S&P 500 (^GSPC 0.55%) posted a modest rise to start the week.

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Data source: Yahoo! Finance.

Travel stocks were broadly higher on Monday, with big gains for airlines and cruise stocks. Signs that travelers are starting to get out once again are resonating with shareholders, although it's far too early to be certain about whether the coronavirus pandemic has truly reached its height.

Cruising higher

Cruise line operators saw significant gains on Monday. Royal Caribbean (RCL 1.97%) led the way up with a 10% rise, followed by a 9% jump from Carnival (CCL 0.61%) and gains of 8% at Norwegian Cruise Line Holdings (NCLH 2.31%).

Royal Caribbean got things started with a second-quarter earnings report that gave some investors hope. The main bottom-line number was ugly, with losses of $6.13 per share coming in far worse than most had expected. But revenue was more than triple what most analysts had looked to see. Lifting the top line were some deferred sales from one of its luxury business units, which only includes results after a three-month delay. It's unclear whether expectations took those numbers into account.

Two deck chairs on a wooden deck on a ship, overlooking sunset and ship wake.

Image source: Getty Images.

Cruise stocks still face huge challenges. Sailings aren't likely to start before November at the earliest, and a potential second wave of COVID-19 cases could cause further delays.

It's also unclear how far companies like Norwegian, Carnival, and Royal Caribbean have gotten in developing plans that will satisfy government officials at the U.S. Centers for Disease Control and Prevention and its counterparts overseas. Until things get clearer, shareholders in cruise stocks will have to get used to severe volatility.

Returning to the sky

Elsewhere in travel, airline stocks also gained altitude. United Airlines Holdings (UAL -2.02%) led major carriers with a 9% rise, while Delta Air Lines (DAL -3.04%) weighed in with an 8% gain. American Airlines Group (AAL -0.47%) and Southwest Airlines (LUV 2.08%) participated as well, posting advances of 7% and 5%, respectively. Smaller carriers showed similar increases, with JetBlue Airways (JBLU 3.39%) notably leading the way upward.

Airlines are rising because of the latest figures from the Transportation Security Administration. More than 830,000 people came through TSA checkpoints on Sunday, Aug. 9. That's the highest number since March 17 and has many analysts concluding that attitudes toward air travel in the U.S. are starting to return more toward normal conditions.

The problem here is that those traffic figures are still far below pre-pandemic levels. In the meantime, a Sept. 30 deadline looms large in the industry, as airlines will have the ability to start implementing layoffs if federal efforts to extend payroll funding don't bear fruit by then. Although a smaller labor force is likely the long-term answer for many carriers, the impact on the broader economy would be large enough to give lawmakers and industry officials pause.

Everyone is anxious to put COVID-19 behind us, but unrealistic expectations about a recovery could prove to be counterproductive. Investors need to be careful about irrational optimism in the absence of evidence that things are in fact under control. If conditions get worse again, airline stocks could be the first to feel the negative effects.