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Why MGM, Norwegian Cruise, and Royal Caribbean Stocks Bounced Back Today

By Rich Smith - Jul 20, 2021 at 5:03PM

Key Points

  • Worries of a spreading coronavirus variant shook the stock market Monday.
  • There was no new good news on that front today.
  • But the market -- and these three leisure stocks -- went up anyway. Go figure.

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Investors got spooked yesterday, but they got brave again today for no obvious reason.

What happened

On Monday, the cruise industry -- indeed, just about every industry related to travel and leisure in any way -- got knocked for a loop by worries that a revived coronavirus, fueled by its delta variant, would throw the world back into lockdown.

It took less than 24 hours for those worries to apparently subside.

Cruise ship next to a beach with palm trees

Image source: Getty Images.

So what

On Tuesday, shares of travel and leisure stocks rebounded strongly:

  • Hotel, casino, and resort company MGM Resorts (MGM -2.09%) achieved a 4.8% gain by the closing bell.
  • Royal Caribbean (RCL 0.56%) shares rose 7.7% on the day.
  • Norwegian Cruise Line Holdings (NCLH 1.77%) closed 8.3% higher.

What was the catalyst behind Tuesday's rebound? As Marketwatch quoted one group of bemused analysts who were posed the question, "The rebound reflected ideas the previous sell-off was overdone."  

In other words, there wasn't a clear reason for today's bounce back.

Now what

What's interesting about today's rebound, though, is the net results after the past two trading days:

  • MGM Resorts stock now sits 1.2% above where it closed on Friday last week.
  • Royal Caribbean shares cost 3.5% more today than they did then.
  • And Norwegian Cruise has not only recovered all its losses of yesterday, but also booked a gain of 2.3% from Friday.

That's right: It's just as if Monday never happened at all! So I guess the lesson for investors who sold in a panic yesterday is one of the oldest pieces of advice ever written: "Act in haste, repent at leisure."

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$39.67 (0.56%) $0.22
MGM Resorts International Stock Quote
MGM Resorts International
MGM
$34.71 (-2.09%) $0.74
Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
NCLH
$13.21 (1.77%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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