Airline stocks and sector-related exchange traded fund climbed Monday on positive developments in a potential coronavirus vaccine candidate out of Pfizer and BioNTech that would help global travelers step out again.
The U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, gained 16.3% Monday on over four times its normal trading volume and broke above its long-term resistance at the 200-day simple moving average.
Airline stocks have exhibited extreme sensitivity to coronavirus news as the pandemic has prevented many from flying. The industry has been among the hardest hit sectors due to the COVID-19 pandemic. While travel has steadily improved since April, the recent spike in new cases has triggered new lockdowns across Europe and fueled fears of similar moves in the U.S.
“A coronavirus vaccine is the positive catalyst we were looking for to really kick start an aerospace recovery, and while some of the moves today might fade with profit taking, we think this news is fundamentally a step in the right direction,” analyst Robert Stallard at Vertical Research Partners said in a note, according to MarketWatch.
Demand has climbed from more than five-decade lows hit in April, but air travel is still far below normal levels, CNBC reports. The Transportation Security Administration tallied an average of 616,868 people a day since March 1 through Sunday, compared to 2.4 million a day during the same period last year.
“International travel has been slow but domestic majors in the US are putting more flights from the north to the south as people in the US are heading to warmer climates where economies are more open. This was the opposite in the summer as more Americans were getting out of the cities and going to less populated areas of the country in the north,” Frank Holmes, U.S. Global Investors CEO and CIO, told ETF Trends.
Fueling the broad rally, Pfizer and BioNTech revealed Monday that their coronavirus vaccine was more than 90% effective in preventing infections among those without evidence of prior contracting the virus.
Further adding to the rally in airlines, investors are also betting on Congress to approve a relief package of some sort. Many anticipate Joe Biden’s victory, along with a divided Congress, would result in a smaller stimulus package than if Democrats won the full Congress. Senate Majority Leader Mitch McConnell said last week that “we need another rescue package,” raising hopes that the lame-duck session of Congress could pass a package by the end of the year, Barron’s reports.
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