The S&P 500 Index (^GSPC -0.74%) gained another 23 points, or 0.67%, on Friday, closing the last week of August 3.2% higher than it started. That was the best week of the month, and barring a collapse on Monday, would make August the best month for stocks since May. 

Today's big gains came after the Department of Commerce said that an important measure of personal consumer spending increased 1.9% on a seasonally adjusted basis in July.

People on a cruise ship.

Investors have been bullish on travel and hospitality stocks lately. Image source: Getty Images.

On this news, along with continued momentum from Thursday's big news that the Food and Drug Administration had approved a 15-minute COVID-19 test costing $5, investors continued to buy shares of companies seen as being big beneficiaries of fast, cheap testing. These include cruise stocks, airline stocks, and casino and hotel stocks. Leading the charge today was Carnival (CCL -5.56%) with shares up almost 7%; along with Wynn Resorts and Alaska Air, up nearly 6%; and MGM Resorts International (MGM -3.16%) and Marriott International (MAR -1.47%), up more than 4%. 

Hospitality, travel stocks continue to lead the charge

Today's big move higher for the stocks above, along with Delta Air Lines (DAL -0.74%) (which gained almost 4% today), is a continuation of a huge month. Here is how August played out for some of the best performers from these laggards in the consumer discretionary sector

^SPX Chart

^SPX data by YCharts.

The big gains have been spurred by a few positive economic data points, including the increased consumer spending post-lockdown, as well as improvements in airport traffic from the lows in April. 

Add in the prospects of a rapid, cheap coronavirus test that doesn't have to go to a lab to be processed, and investors are piling into businesses that have seen their biggest downturns since March, but could see big gains once they're able to return to business as usual. 

Prospects for these businesses may not be as rosy as investors expect, however. MGM just announced that it was laying off 18,000 workers, while United Airlines HoldingsAmerican Airlines Group, and Delta could cut well over 50,000 workers combined, barring federal aid that requires them to keep those employees on payroll. Air traffic is still down some 70%, and the airlines are bleeding cash. 

The case is the same for cruise companies, where it's even worse since the entire industry remains under a "no sail" order in the U.S. from the Centers for Disease Control that's unlikely to be lifted anytime soon. 

Coronavirus tests don't guarantee a return to normal -- or profits

The volume of tests Abbott says it can produce is about 50 million per month at full capacity in October. Most of those tests (if not all) will be administered to essential personnel in healthcare and emergency responders. And it's a near-certainty that priority will be given to those in education and other essential services -- including child care, supermarkets, and agriculture -- before any hospitality or travel company gets access. 

So while the prospects for a cheap, fast test are a positive, the path to using those tests for commercial enterprises is likely longer than investors may appreciate. 

Earnings: Gap, Ulta Beauty deliver the goods

Nobody expected retailer Gap (GPS 1.51%) to have a big, profitable second quarter. Like most retailers, its stores were largely shut for part of the quarter, and it was already dealing with weakness as changing consumer tastes steadily eroded the once-leading apparel company. But it still impressed many investors with $3.3 billion in sales, down "only" 18%, while online sales helped it boost its same-store sales by 13%.

Gap lost $0.17 per share, but both the top and bottom lines beat expectations; analysts were expecting sales of $2.9 billion and a much bigger $0.41 loss per share on average. 

Ulta Beauty (ULTA -0.58%) similar came into its quarterly report with low expectations; beauty products are the sort of things people don't buy as much during a global pandemic. And sales did indeed fall, down 26%, while gross margin was 27%, also much lower than last year's quarter. However, those results were within expectations, and unlike Gap, Ulta delivered a modest operating profit in the quarter. 

Next week's earnings: Soup, scrap, spirits, and semiconductors

Second-quarter earnings season is starting to wrap up, but a handful of companies are set to report next week. Notable names include Jack Daniel's distiller Brown-Forman and auto scrap and auction giant Copart on Sept. 2, and semiconductor giant Broadcom and packaged foods company Campbell Soup on Sept. 3.