Can the Latest Stimulus Bill Help “JETS” ETF Soar?

The $2 trillion stimulus package helped airline stocks to rally as the bill incorporated funding to help shore up the airline industry, which took a hit after travel restrictions were imposed by countries in order to minimize the spread of the coronavirus. This will certainly help exchange-traded funds (ETFs) with exposure to airlines like Boeing and Delta Air Lines.

Per a Barron’s article, the bill “provides $33 billion in grants for airlines to make payrolls, including $25 billion for passenger carriers, $4 billion for cargo operators such as FedEx and United Parcel Service (UPS), and $3 billion for contractors. The bill also makes $29 billion in loans available, providing a liquidity backstop if private capital markets freeze up. And it includes waivers on fuel and excise taxes through 2020.”

”The existence of the program itself is very bullish cause it allows lenders to think about the industry surviving,” Bernstein analyst David Vernon told Barron’s.

With the coronavirus outbreak, the number of travelers taking to the skies certainly saw a marked decrease, but the latest stimulus package should help the US Global Jets ETF (NYSEArca: JETS) take-off. JETS seeks to track the performance of the U.S. Global Jets Index, which is composed of the exchange-listed common stock (or depository receipts) of U.S. and international passenger airlines, aircraft manufacturers, airports, and terminal services companies across the globe.

With the federal government stepping in to provide support for the airline industry, JETS responded positively to the stimulus news in Thursday’s trading session, rising as much as 11%:

JETS Price Chart

JETS Price data by YCharts

For investors looking for broad-based exposure to the transportation sector, they can look at the following funds:

  1. SPDR S&P Transportation ETF (NYSEArca: XTN): seeks to provide investment results that correspond generally to the total return performance of an index derived from the transportation segment of a U.S. total market composite index. The index represents the transportation segment of the S&P Total Market Index (“S&P TMI”).
  2. Direxion Daily Transportation Bull 3X Shares (NYSEArca: TPOR): seeks daily investment results equal to 300 percent of the daily performance of the Dow Jones Transportation Average. The index measures the performance of large, well-known companies within the transportation industry.
  3. iShares Transportation Average ETF (NYSEArca: IYT): seeks to track the investment results of the Dow Jones Transportation Average Index composed of U.S. equities in the transportation sector. The underlying index measures the performance of large, well-known companies within the transportation sector of the U.S. equity market.

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