Please ensure Javascript is enabled for purposes of website accessibility

Stock Markets Jump on COVID-19 Hopes; Travel Stocks Soar

By Dan Caplinger – Aug 24, 2020 at 5:26PM

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

Investors are looking for positive signs wherever they can find them.

The stock market began the new week on a sharply positive note. Market participants appeared to be excited about the U.S. Food and Drug Administration's decision to issue an emergency authorization for the use of antibody-containing plasma for treating COVID-19 patients. That gave investors new optimism that the global economy will be able to move forward without any further interference from the coronavirus pandemic. Gains were largest for the Dow Jones Industrial Average (^DJI -1.71%), but the S&P 500 (^GSPC -1.51%) and Nasdaq Composite were able to advance to new record highs.

Today's stock market


Percentage Change

Point Change




S&P 500



Nasdaq Composite



Data source: Yahoo! Finance.

If there's one industry that's gotten hit the hardest by the pandemic, it's travel. It's therefore not surprising to see the travel industry rally sharply on any news that suggests an end might be in sight for the worst of the coronavirus crisis. The big question that remains, though, is whether travel stocks are getting ahead of themselves.

A big bounce across the board

Just about every segment of the travel industry did well on Monday. The impact of a full recovery would be different for various subsectors, roughly in proportion to the amount they've gotten hit.

Cruise ship operators saw substantial gains, as they've arguably taken the worst of the crisis. Norwegian Cruise Line Holdings (NCLH -18.04%) climbed more than 10%, while Carnival (CCL -23.25%) came in with a 7% gain. Royal Caribbean Cruises (NYSE: RCL) finished the day up almost 5%.

Cruise ship in an inlet, with a beach and a small island nearby.

Image source: Getty Images.

It's not immediately apparent whether the news of a potential treatment for COVID-19 would actually help the cruise lines immediately. Cruise operators haven't actually been suffering a loss of confidence among customers, who've actually been impatient to get back to sea. Instead, satisfying regulators about the safety of cruises going forward has been the biggest sticking point. No-sail orders have continued beyond their original durations, and it's still not clear whether the companies operating cruises have come up with coronavirus mitigation plans that will satisfy the Centers for Disease Control and Prevention and similar regulators overseas.

Airlines fly higher

Elsewhere, airline stocks also performed well. American Airlines Group (AAL -1.71%) and United Airlines Holdings (UAL -1.16%) were the best performers, climbing 11% and 10%, respectively. Delta Air Lines (NYSE: DAL) gained 9% on the day, while Southwest Airlines (NYSE: LUV) advanced more than 6%.

In general, U.S. carriers with extensive international schedules fared better than carriers that fly solely within the U.S., in large part because the continuing impact of COVID-19 on international travel depends much more on finding a viable treatment. With travel between the U.S. and most other countries being limited, it'll take a proven vaccine or treatment to convince many nations to open their doors to American travelers.

Also, unlike cruise ships, airplanes are flying people even under the threat of COVID-19. Hope for a viable treatment could make more travelers willing to fly, further boosting the prospects for carriers. In that sense, today's news could be more helpful for airline stocks than for cruise company shareholders.

Nevertheless, we're still a long way from having any candidate vaccine or treatment make its way fully through the regulatory process. Investors are being optimistic here, but a reversal is possible if things don't go as well as hoped.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Carnival, Delta Air Lines, and Southwest Airlines. 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

Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
$11.36 (-18.04%) $-2.50
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$12.04 (-1.71%) $0.21
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$28,725.51 (-1.71%) $-500.10
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,585.62 (-1.51%) $-54.85
Carnival Corporation Stock Quote
Carnival Corporation
$7.03 (-23.25%) $-2.13
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
$32.53 (-1.16%) $0.38

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

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.