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Why General Electric Stock Bounced Back Today

By Rich Smith - Jul 20, 2021 at 2:39PM

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What went down just went back up.

What happened

Industrial behemoth General Electric (GE 0.94%) couldn't fight the tide yesterday. As Wall Street sold off on worries of a reinvigorated, Delta variant-fueled COVID-19 pandemic that would devastate demand for air travel -- and airplane engines -- shares of General Electric sold off as well. Remember, General Electric used to depend on sales of airplane engines to provide as much as 35% of its revenues.

But today is a new day. Investors seem to have gotten over their worries about COVID-19 (again). And General Electric stock is moving higher again -- up 4.7% in 2 p.m. EDT trading.

Smiling flight attendant talks to an airplane passenger while standing in the aisle.

Image source: Getty Images.

So what

This story really is as simple as that. There's no other news "moving" General Electric stock today.

All that is happening is that, yesterday, investors were worried that people would give up flying again, and that airlines would cancel flights and stop buying airplanes (and airplane engines). So GE stock fell 4.4%. Today, they've stopped worrying -- and so GE stock is up 4.7%.

Now what

Is this good news or bad news? Actually, I think it's both. It's bad news because investors are acting flightily (if you'll pardon the pun), and there's no guarantee they won't revert to worrying about the sudden evaporation of airline travel again tomorrow.

But the good news is that, worries notwithstanding, studies still show that vaccination is an effective proof against COVID-19. Even the Delta variant, it turns out, can't get by Pfizer's vaccine, which has proven 96% effective at preventing disease serious enough to require hospitalization and 88% effective at preventing any sort of symptomatic coronavirus disease.  

As long as those kinds of numbers hold true, I think the revival in air travel will continue, and with it, the revival of GE's airplane engine business, too.

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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