Wheels Up! Airlines and Travel Stocks Have Taken Off on Pent-Up Demand

As you may know by now, stocks just had their best August in more than 30 years. The S&P 500 Index gained 7 percent, the most for the eighth calendar month since 1986, around the same time that Gordon Gekko raided corporations in Oliver Stone’s Wall Street.

This is highly positive, as it means investors are betting that a possible vaccine for the coronavirus could be made available sooner rather than later. The head of the Food and Drug Administration (FDA), Stephen Hahn, said on Sunday he is willing to authorize a vaccine before Phase Three clinical trials were complete.

Tech stocks have been responsible for much of the market’s gains this year, but August saw a new crop of big gainers. Travel stocks—including airlines, cruise lines and hotels—were among the best performing equities during the month as new daily COVID-19 cases have declined in the U.S. from their mid-July highs. The NYSE Arca Airline Index rose an incredible 17.20 percent, its biggest one-month gain since January 2012.

travel stocks were among the best performing in august
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Royal Caribbean was the top performer of the bunch at 41 percent, followed by MGM Resorts at 40 percent and Norwegian at 25 percent—all representing industries that have been hardest hit by the pandemic.

The five biggest airlines in the U.S.—Delta, Southwest, American, United and Alaska—saw double-digit growth in August, even as federal aid is soon to run out. However, President Donald Trump said recently that he supports additional assistance to protect airline workers. “We’ll be helping the airlines. You have to help the airlines,” Trump said from the White House Tuesday.

What that help might look like is unclear at the moment, but Trump’s chief of staff Mark Meadows claimed last week that Trump is considering an executive order to bypass Congressional lawmakers, which have still not agreed on a second major coronavirus relief package.