The Dow Jones Industrial Average (DJINDICES:^DJI) jumped on Thursday despite a worsening coronavirus pandemic and uncertainty over a new stimulus bill. The U.S. reported just over 200,000 cases of COVID-19 on Wednesday, according to Johns Hopkins University. There are now over 100,000 related hospitalizations in the U.S., and the daily death toll set a pandemic record on Wednesday. The troubling numbers may make additional economy-crippling lockdown measures more likely.
The Dow was up 0.52% at 12:20 p.m. EST Thursday, getting a big boost from Boeing (NYSE:BA) and Walgreens Boots Alliance (NASDAQ:WBA). Boeing stock soared after Ryanair committed to buying another 75 Boeing 737 MAX planes, and Walgreens stock surged on no meaningful news.
Boeing stock flies on 737 MAX order
On Wednesday, Boeing allowed media on board a 737 MAX for the plane's first flight since the grounding order in the U.S. was lifted. Boeing was looking to convince the flying public that the troubled plane was safe after changes were made in response to two fatal crashes.
One major airline didn't need any convincing. Boeing announced on Thursday that European airline Ryanair had ordered 75 additional 737 MAX jets. Ryanair now has 210 of the planes on order, with some set to be delivered in 2021.
Ryanair ordered the 737-8-200 variant of the 737 MAX, which offers increased capacity compared with the base model. Ryanair will configure the planes with 197 seats each, and it expects to lower fuel consumption by 16% compared with previous airplanes.
Ryanair CEO Michael O'Leary is confident that 2021 will be a better year for air travel: "As soon as the COVID-19 virus recedes -- and it likely will in 2021 with the rollout of multiple effective vaccines -- Ryanair and our partner airports across Europe will -- with these environmentally efficient aircraft -- rapidly restore flights and schedules, recover lost traffic and help the nations of Europe recover their tourism industries, and get young people back to work across the cities, beaches and ski resorts of the European Union."
The Ryanair order is a vote of confidence in Boeing's 737 MAX and a sign that some airlines are anticipating better times ahead. Boeing will need airlines to be confident enough to place firm orders for its planes at a time when passenger volumes are still deeply depressed due to the pandemic.
Shares of Boeing had soared 7.9% by early Thursday afternoon on the news. The stock is still down about 26% since the start of the year.
Walgreens stock up big
Shares of drug store chain Walgreens soared nearly as much as Boeing stock on Thursday, up about 7.5% by early afternoon. There wasn't any real news, but Walgreens stock is deeply depressed this year, so it may be attracting bargain hunters. Walgreens produced adjusted earnings per share of $4.74 in fiscal 2020, putting the price-to-earnings ratio at a paltry 9.
There's at least one good reason for Walgreens to trade at a steep discount to the market: E-commerce giant Amazon (NASDAQ:AMZN) launched its own pharmacy service in November. Amazon Pharmacy allows customers to use the Amazon app or website to complete a pharmacy transaction, and it offers Amazon Prime members significant savings on both name brand and generic prescriptions. Prime members will also get two-day shipping on prescriptions, while everyone else will get free delivery within five days.
This new service from Amazon is perfectly timed: The COVID-19 pandemic is the worst it's ever been in the U.S. in terms of daily cases, hospitalizations, and deaths. Those looking to minimize going to stores will likely be tempted by a convenient prescription delivery service, especially if they're already Prime members.
Walgreens stock sank on the Amazon Pharmacy news last month, but the stock has now more than recovered after Thursday's really. Only time will tell how much market share Walgreens ultimately gives up to the Amazon juggernaut.