Why Travel Stocks Are Higher Today

What happened

The so-called “reopening trade” took flight on Tuesday, with headlines suggesting the latest pandemic surge had peaked in a number of key states and that optimism continues about the vaccine rollout. Booking Holdings (NASDAQ:BKNG) shares rallied 6% higher, and among airline stocks shares of American Airlines Group (NASDAQ:AAL), Southwest Airlines (NYSE:LUV), United Airlines Holdings (NASDAQ:UAL), and Spirit Airlines (NYSE:SAVE) each climbed 5%.

So what

Airline stocks and other travel companies have been stuck in a holding pattern of late. The sector was hit hard last year when the pandemic brought travel demand to a halt, but had rallied in early 2021 on increasing demand thanks to vaccines.

That rally has since faded. The delta variant has led to an uptick in new COVID-19 cases, which could be a threat to fall travel. And with most of the demand we have seen this summer tied to leisure and not business travel, there is some concern that the upcoming Labor Day weekend could lead to a severe drop off in passengers.

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