What happened

Shares of AMC Entertainment (NYSE:AMC)Norwegian Cruise Line (NYSE:NCLH), Carnival Cruise Line (NYSE:CCL) (NYSE:CUK), and Royal Caribbean Cruise Line (NYSE:RCL) finished higher today as they were among several "recovery stocks" to post significant gains today.

Though there was no company-specific news out on these stocks, a number of factors seemed to be contributing to their gains. First, investors were hopeful that the results of this week's Federal Open Market Committee meeting, which were presented this afternoon, would help spur Congress to pass another round of stimulus and reassure investors that the central bank would continue to do what it could to shore up markets, helping these struggling companies maintain borrowing capacity. The rising tide in stocks following the market's assumption that a divided government will form -- with Joe Biden winning the presidency but Republicans keeping the Senate -- also may have helped this sector by boosting overall sentiment for stocks. 

Finally, hopes that a COVID-19 vaccine would be approved by the end of the year also seemed to be lifting these stocks, as AstraZeneca said its vaccine could be ready for large-scale distribution by December.

Carnival closed up 6.3%; Norwegian gained 6.7%; Royal Caribbean rose 5.6%; and AMC climbed 6.5%. At the same time, the S&P 500 finished the day up 2%.

A Carnival cruise ship in port

Image source: Carnival.

So what

While the cruise lines and AMC are subject to similar trends, they still operate in different sectors.

In addition to the news above, cruise stocks seemed to be responding to an update from Seaburn, an ultra-luxury cruise line, that said that it was experiencing demand for its world cruise for 2022, a sign of pent-up demand for the industry as cruise trips have been canceled in much of the world for 2020. Additionally, last week, the Centers for Disease Control (CDC) gave cruise lines permission for a phased reopening, which, combined with positive vaccine developments, could build hopes that U.S. ships will set sail soon. 

Despite the CDC's policy change, Carnival recently announced that it wouldn't be doing any North American sailings for the rest of the year, joining Norwegian, which made a similar call the same day. Royal Caribbean has yet to make such an announcement, but is likely to do so, given the unfriendly conditions it's facing. Carnival, the biggest of the three, has the highest monthly cash-burn rate, at an estimated $530 million, showing how costly the pandemic has been for the trio.

It's clear that these companies are among those with the most to gain from a vaccine, and with several drugmakers in phase 3 trials, the stocks are likely to be sensitive to any progress on that front.

AMC, meanwhile, issued a warning last month that it could be forced into bankruptcy by the end of the year or early next year if it didn't receive new funding, or if attendance at its theaters didn't improve significantly. While a vaccine would certainly help the movie theater operator, the company has problems beyond weak customer demand. Studios are reluctant to release movies in theaters until they are confident that audiences will return, which may not happen until the pandemic ends or there's a vaccine widely available.

Now what

With election uncertainty looming, a slew of important updates soon to come on the vaccine front, rising coronavirus cases, and sector-level issues affecting both cruise lines and movie theaters, the coming weeks will continue to be volatile ones for these stocks. Despite their financial challenges, investors still see potential for a rebound, and accommodative Fed policy and another round of stimulus would only help, but these stocks are in deep financial holes. Therefore, gains like today's may be more representative of market euphoria than anything else.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.