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The Most Shocking Winners in Friday's Stock Market Rout

By Dan Caplinger – Oct 30, 2020 at 5:27PM

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These are the last companies you'd expect to post big gains on a day like today.

The stock market finished October on a terrible note, with big losses that reflected investor discomfort with all the unresolved issues in the markets right now. With declines of between 0.5% and 3% on Friday, the Dow Jones Industrial Average (^DJI 0.08%), S&P 500 (^GSPC 0.25%), and Nasdaq Composite (^IXIC 0.95%) all finished down for the month, with the Dow leading the markets to the downside with a nearly 5% fall in October.

Today's stock market


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Data source: Yahoo! Finance.

The coronavirus pandemic has been a major cause of recent concern, as case counts across the U.S. have spiked higher. Those adverse trends don't appear likely to reverse lower anytime soon. It'd therefore be reasonable to think that cruise ship stocks would continue to be on the defensive in a down market worried about the coronavirus.

Yet as it turns out, the federal government did something that actually helped the cruise industry. Shares of Carnival (CCL 3.67%), Royal Caribbean (RCL -0.19%), and Norwegian Cruise Line Holdings (NCLH -1.25%) all moved higher on Friday, marking a huge departure from most of the rest of the market.

Person with surprised expression, in front of a tangerine-colored wall.

Image source: Getty Images.

The CDC gives in

The Centers for Disease Control and Prevention has been a big part of what's held back cruise ship operators over the past several months. The CDC's no-sail order didn't allow Norwegian, Royal Caribbean, or Carnival to conduct cruise operations in U.S. territorial waters. As the first wave of cases ended, the federal government agency got some criticism for extending the no-sail order until the end of October.

With the coronavirus threat now appearing worse than ever, though, it seemed at least plausible that the federal public health institute would extend the no-sail order again. However, that didn't happen. Instead, the CDC issued what it called a "conditional sail order," setting the stage for U.S. cruise operations to start up again.

That news led to a nice push higher for cruise stocks. Carnival led the way higher with a 6% rise, while Norwegian and Royal finished higher by around 5%.

Don't pack your bags just yet

To be clear, long-suffering cruise travelers shouldn't assume that ships will start setting sail Nov. 1. The CDC order establishes a framework to phase in passenger cruises, with the first steps involving crew-only exercises to show that they can operate safely under new COVID-19 protocols.

Moreover, many cruise operators had already canceled some or all of their scheduled sailings for the remainder of 2020. It remains to be seen whether they'll scurry to add back any of those dates, gambling that they can satisfy the conditions of the CDC order in time.

Finally, there's no guarantee that passengers will return to cruise ships in the same numbers the industry enjoyed before the pandemic hit. Even with a conditional sail order, the CDC continues to advise of the dangers of going aboard cruise ships during the pandemic.

That's not to say that Royal Caribbean, Norwegian, and Carnival haven't learned a lot from the public health community throughout most of 2020. Cruises will undoubtedly be safer than they were when the pandemic started. The unanswered question, though, is whether they'll be safe enough to avoid mass health events at a time when COVID-19 cases are on the rise again.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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