What happened

Disheartened by Congress' failure to include support for the beleaguered cruise industry in its $900 billion stimulus bill passed Monday, investors sold off shares of all three major publicly traded cruise line stocks -- Royal Caribbean (NYSE:RCL), Carnival Corporation (NYSE:CCL)(NYSE:CUK), and Norwegian Cruise Line Holdings (NYSE:NCLH) -- yesterday. But today, investors are having a change of heart.

As of 11:15 a.m. EST, Royal Caribbean shares are back up 3.5% and have recovered all their losses from Tuesday (and even a bit more). Both Carnival and Norwegian Cruise are nearly back to where they were at Monday's close -- and are gaining 6.3% apiece today.

Four wavy arrows zooming up

Image source: Getty Images.

So what

Why the sudden change of sentiment? Well to begin with, while investors might have hoped for a bailout from Congress, they really shouldn't have been counting on one. Congress dissed the industry in its first round of coronavirus stimulus back in March. With this week's stimulus bill less than half the size of the earlier bill, there wasn't much chance that the cruise industry would fare any better this time around.  

Still, provisions in the second stimulus bill designed to stoke discretionary consumer spending -- $300 weekly in extra federal unemployment benefits, and $600 checks for most Americans -- could potentially put enough cash in enough consumers' pockets to help jump-start a recovery, once cruising is able to resume.

Indeed, as CruiseIndustryNews.com reported earlier this week, even before Congress approved these payments, internet searches for cruises in 2021 were on the rise -- up 30% in the October to November period, as compared to search volumes from April to September. With vaccines starting to roll out, and the CDC at least having a framework set up for cruise lines to resume cruising, online travel company Expedia (NASDAQ:EXPE) predicts "strong interest for cruises sailing in 12 to 18 months' time."  

Now what

Not all the news is good, of course. A 12- to 18-month timeframe doesn't sound particularly propitious for Carnival's plan to resume cruising from Canada to Alaska in May 2021, for example. That timeline may also be cutting it close for cruise lines that are continuing to burn through a combined nearly $1 billion in cash every month, as they await a return to cruising. Norwegian in particular probably only has enough cash on hand to keep it afloat for 14 months, even after its last capital raise.

In short, the recession isn't over for cruise line stocks just yet.

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.