The Nasdaq Composite (^IXIC 0.10%) has suffered more than most other major market benchmarks, having dropped enough to meet the official definition of a bear market earlier this week. However, on Wednesday, investors are feeling a lot better about the market's prospects. That has the Nasdaq up more than 3% as of 1 p.m. ET.
Among the biggest winners on the Nasdaq early Wednesday afternoon were travel stocks. Many companies in the travel industry have been under pressure throughout the past couple of years, and the recent escalation of tensions between Russia and Ukraine into a full-blown invasion made investors feel a lot less comfortable about the prospects for the immediate future. Particularly notable were the moves higher in Booking Holdings (BKNG -0.47%) and Expedia Group (EXPE 0.58%), especially given how much they had fallen in just the past couple of weeks.
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Booking some gains
Shares of Booking Holdings were up more than 9% on Wednesday afternoon. The move higher came after a massive drop that had lopped almost $900 per share off the online travel specialist's stock price since mid-February.
Russia's invasion of Ukraine and the resulting imposition of sanctions across much of the U.S. and Europe had a chilling effect on Booking Holdings shareholders. Even with so much pent-up demand for travel following two years of pandemic-related travel restrictions, particularly on international travel, investors had hoped that the summer of 2021 would finally bring the travel industry back to normal and reward them for their patience.
Yet fundamentally, Booking Holdings remains strong. Its most recent quarterly report in late February showed a massive 141% rise in revenue year over year, and while Booking still hasn't quite caught up to pre-pandemic levels, cost discipline also resulted in a healthy quarterly profit even at a time of year that isn't necessarily the strongest for the industry.
Wednesday's rise reflects increasing recognition that Booking remains a leader in travel. Even as competition gets fiercer, there seems to be enough room for multiple players to serve customers hungry to leave home and see new places.
Gains for the broader travel industry
Indeed, shares of other major travel stocks also picked up ground on Wednesday. Expedia climbed more than 7%, with many of the same factors contributing to its own prospects for longer-term growth. Airbnb saw a 5% rise, while hotel giant Marriott International gained almost 6% on the day.
Hopes for a more sanguine geopolitical situation even played into companies with almost no exposure to the areas most affected by war. Casino stocks were broadly higher, including a 9% gain for Wynn Resorts, as investors are optimistic that the reopening of the Asian gambling capital of Macao could bring a return to pre-pandemic profit levels for the companies that have massive resorts there. Cruise-line stocks also moved higher, including double-digit percentage gains for Norwegian Cruise Line Holdings.
Looking out beyond 2022, there's a possibility that just as the pandemic spurred growth in stocks that played to the stay-at-home trend, the release of pent-up travel demand might create an unsustainably high level of revenue and profit that travel companies won't be able to match in 2023 or 2024. That could lead to the same up-and-down stock-price volatility we've seen in tech stocks lately.
For now, though, investors have high expectations for travel stocks to bounce back. Today's moves are a step in the right direction along that road.
