Stock Markets Soar on Stimulus Hopes, but Who Stands to Benefit Most?

The stock market got off to a great start to the new week on Monday, as market participants seemed to put their troubles behind them. The pullback throughout much of September has left some investors on edge, but it's whetted others' appetites to pick up cheap stocks at bargain prices. The Dow Jones Industrial Average (^DJI -0.11%), S&P 500 (^GSPC 0.02%) and Nasdaq Composite (^IXIC 0.10%) all saw nice gains to build on momentum from late last week.

Today's stock market

Data source: Yahoo! Finance.

Some of the optimism on Wall Street came from news that congressional leaders would once again talk about the possibility of putting more money into people's hands through stimulus measures. But it's far from clear whether a new stimulus package would look anything like previous ones.

It's possible that any assistance would be targeted to specific areas or industries, potentially leaving individual Americans with nothing to show for it. Below, we'll look at some of the companies that could benefit most from such measures.

Image source: Getty Images.

Could airlines take flight?

Looking at today's share price movements, airline stocks were definitely a source of strength. Major carriers were up 3% to 5%, with Delta Air Lines (DAL -2.62%) leading the way. Boeing (BA -2.87%) also moved higher with a 6% rise of its own.

For airlines, the timing of additional stimulus would be crucial. Currently, the restrictions on airlines regarding measures like furloughs and layoffs are set to expire after Sept. 30. That's because the initial round of aid packages that many airlines received came with a six-month window that was set to end on that date.

Without assistance, it's likely that airlines will follow through on plans to reduce staffing dramatically. That could create another ripple effect throughout the U.S. economy, potentially starting another wave of economic pain that would only exacerbate the current recession.

Are banks looking for help?

Elsewhere, shares of big banks were generally higher. Wells Fargo (WFC -0.56%) lagged behind its peers, but other major institutions were up 2% to 3%, led by Citigroup (C -0.32%). European banks were up even more sharply, with UBS (UBS -3.63%) and Deutsche Bank (DB -0.12%) climbing 5%.

Thus far, there's been little sign of any significant stress on the financial system. Loan default rates have risen somewhat, but for those who remember the 2007-2008 financial crisis, today's concerns are tame by comparison.

Yet it's in banks' best interest for the federal government to do everything it can to support consumers. If that means borrowing more money, that's not a problem, as it could help push long-term interest rates higher and make banks' core lending businesses more profitable.

Bank stocks shouldn't count on any sort of specific bailout provisions in a new stimulus deal. But if such a deal includes money that'll go to ordinary Americans, then it will have an indirect benefit in helping boost the creditworthiness of customers. That in turn should lift share prices, which have been depressed since even before the COVID-19 pandemic started.

Keep your eyes open

Washington is an unpredictable place. Many thought that a new stimulus deal would have happened long before now. With the election just weeks away, though, market participants have to watch to see what action elected officials take with respect to the economic well-being of their constituents.