Stocks have started out 2021 on an optimistic note, sending most major stock market benchmarks to all-time highs in recent days. On Thursday, that optimism continued to take shape. Even with a big rise in jobless claims, investors seem hopeful that Washington will be able to reach some compromise that will allow Americans to get larger stimulus checks than the $600 that just got approved. As of 10:30 a.m. EST, the Dow Jones Industrial Average (^DJI +0.11%) was up 136 points to 31,197. The S&P 500 (^GSPC 0.16%) had risen 13 points to 3,823, and the Nasdaq Composite (^IXIC 0.71%) had picked up 84 points to 13,214.
The aerospace industry had a couple of the biggest winners on Thursday. Shares of Virgin Galactic Holdings (SPCE 4.45%) spiked higher on news that has more to do with Wall Street than orbital mechanics, while Delta Air Lines (DAL 0.69%) has airline stock investors feeling more confident about what 2021 will bring.
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A new buyer for Virgin Galactic stock?
Shares of Virgin Galactic launched higher faster than a speeding rocket on Thursday morning. The 20% gain came amid news that a new investment vehicle could well end up becoming a major investor in the space tourism company.
Exchange-traded fund specialist ARK Investment Management has been one of the leaders of the ETF industry in recent years, with its actively traded ETFs soaring far above the returns of the stock market. Today, ARK filed papers with the U.S. Securities and Exchange Commission to create an ETF that will focus on space exploration.
There aren't that many publicly traded companies that offer exposure to space right now. Many of the top players are still privately held, most notably Elon Musk's SpaceX and Jeff Bezos' Blue Origin. That makes it likely that Virgin Galactic could get a relatively substantial initial position in the ETF.
The news reflects the following that ARK and its star investor Cathie Wood have gained. Given the performance that ARK's other ETFs have had, Virgin Galactic should be honored even to be considered.
Delta takes flight
Slightly closer to the ground, shares of Delta Air Lines were higher by 4% Thursday. The airline giant released its fourth-quarter financial results, and although 2020 was a brutal year, shareholders were excited about what the future might bring.
Delta's numbers were ugly. Revenue was down 69% from year-ago levels as the pandemic continued to weigh on traffic. That caused a pre-tax adjusted loss of $2.1 billion, which excludes almost $1 billion in additional costs from Delta's responses to COVID-19. For the full year, operating revenue plunged 66%, and adjusted pre-tax losses amounted to $9 billion.
Delta believes things will turn around in 2021, but it won't come quickly. Its first-quarter forecast calls for total revenue to fall 60% to 65%, and Delta will still burn between $10 million and $15 million in cash every day. However, with $18 billion to $19 billion in available liquidity, the airline should have the capacity to weather the storm as long as conditions improve as the year goes on.
Airline investors have been surprisingly willing to look forward to the future, boosting their share prices long before any real signs of improvement took shape. Now, it'll be up to Delta and its peers to woo travelers back into the skies once the pandemic is fully under control. Until that happens, Delta could see tough times ahead.
