Tuesday was another mixed day on Wall Street, with market participants once again seeing different levels of potential future gains in various parts of the market. The Nasdaq Composite (NASDAQINDEX:^IXIC) moved higher to push into record territory. However, the S&P 500 (SNPINDEX:^GSPC) fell modestly, and the Dow Jones Industrial Average (DJINDICES:^DJI) ended with fairly substantial losses on the day.


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Data source: Yahoo! Finance.

One of the catalysts for upward stock price movement lately has been hope stemming from the emergence of coronavirus vaccines to fight the COVID-19 pandemic. The rollout of those vaccines was supposed to help hard-hit industries like cruise ship stocks and travel stocks even more than the broader market, because the pandemic has been the primary reason they’ve suffered so much in 2020. Yet even as those vaccines become available, shares of many travel-related stocks were lower on Tuesday.

Dealing with disappointment

Different segments of the travel industry saw varying performances on Tuesday. For cruise ship stocks, the hits were relatively hard. Norwegian Cruise Line Holdings (NYSE:NCLH) was dealt the biggest blow, falling 7% on the day. But Carnival (NYSE:CCL) suffered a 6% hit, and Royal Caribbean Cruises (NYSE:RCL) finished lower by 3%.

Image source: Getty Images.

Airline stocks also came under pressure. Discounter Spirit Airlines (NYSE:SAVE) fell more than 5%, with American Airlines Group (NASDAQ:AAL) and Hawaiian Holdings (NASDAQ:HA) losing 4%. Carriers like Delta Air Lines (NYSE:DAL), United Airlines Holdings (NASDAQ:UAL), and JetBlue Airways (NASDAQ:JBLU) weighed in with declines of 2.5% to 3%.

Losses in other areas of travel were more muted. Online travel giant Booking Holdings (NASDAQ:BKNG) eased lower by less than 1%. Hotel giants Marriott International (NASDAQ:MAR) and Hilton (NYSE:HLT) were similarly down only by around 1% on the day.

A cloudy future

Many would’ve thought that travel stocks would do well on Tuesday. Lawmakers passed a stimulus package that will include $600 checks for most Americans, freeing up some discretionary money for those who’ve avoided the full brunt of the economic impact of the pandemic.

Yet even with slightly more money in their pockets, it’s far from clear just how quickly travelers will return to the seas and the skies. It’ll be well into 2021 before the bulk of people have gotten vaccines, and even then, spread of the coronavirus won’t end as long as a significant group remains unprotected.

Industry analysts are equally uncertain. Some believe it could be a decade before cruise operators can expect to get back to their top performance in terms of earnings. Even with pent-up demand, the typical cruise traveler has gotten used to getting huge incentives to entice them to sail. That’ll likely put a lid on margin expansion for years, putting more pressure on cruise companies’ debt-laden balance sheets.

Meanwhile, airlines face the challenge of dealing with strategic plans designed for pre-pandemic growth estimates. Even as flying becomes more prevalent, it’ll still take time for airlines to find the best operational strategies.

Patience will be required

Many have seen the rapid rise in the stock market since March as evidence that a recovery will be fast and furious. Unfortunately, it could take a lot longer than hoped for the travel industry to get back to normal — and for stocks in the industry to reach new highs.


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