The S&P 500 index (SNPINDEX: ^ SPX) ended the trade up 9 points, up about 0.27%, on August 10. But while the index itself was relatively flat, travel, hotel and casino stocks were still in full swing. now on.
Leading the bid is higher MGM Resorts International (NYSE: MGM), up 13.8% on news of a major investor buying a $ 1 billion stake in a casino and resort operator. Aviation stocks also rose higher, with United Airlines (NASDAQ: UAL) Stocks rose the most, up 9.4% following TSA’s latest airport check results at the weekend.
Line-up stocks also climbed higher today, with Royal Caribbean (NYSE: RCL) Group leader: It was up 10% after reporting earnings seem to give investors hope for the entire industry.
Shares of the oil giant struggled Mysterious oil (NYSE: OXY) Also up today, up 6.7%, ahead of the second quarter earnings report after the market closed.
The media giant has bet billions of dollars on the casino industry
Communications giant IAC / Interaction (NASDAQ: IAC) has just bought a 12% stake in MGM Resorts, causing MGM shares to rise sharply on the news. The IAC CEO and Chairman wrote a joint letter revealing the investment, in which they cited MGM’s brand, physical presence and online operations.
Investors have clearly seen the investment in IAC as positive for companies Beach hotel in Wynn (NASDAQ: WYNN) and Las Vegas Sands (NYSE: LVS), bringing their shares up 10% and 7.5%, respectively.
Positive travel news, earnings, and airline stocks are higher
The Transport Security Regulatory Authority gave investors reasons to rush into aviation shares today, reporting that more than 800,000 travelers passed through the checkpoints on Sunday. This is the most tourists in a day since March 17 and soared from a low of 87,534 on April 14. The total number of tourists from Friday to Sunday was just under 2.28 million.
Investors acted quickly on the news, sending shares of every airline in the S&P 500 up by at least 5%. United lead the way, up 9.4%. Here’s how its peers got it done:
Jet plane (NYSE: BA) shares are up 5.4% on the day, likely to go in the opposite direction with higher traffic for commercial flights and hope that demand for the 737 MAX family that remains on the ground will recover. Return faster than expected if air travel continues to increase again.
However, even with the returns TSA reported, investors should step lightly. Air travel at the weekend is still down 70% year-on-year and the industry is still facing deep financial trouble.
Shares of the shipping line soared today following Royal Caribbean report and second-quarter earnings call. The travel giant reported a much larger than expected loss, $ 6.13 per share, and continues to burn more than $ 250 million in cash each month. But in spite of the growing losses, investors appear to be paying attention to the astonishing $ 176 million the company made during the quarter.
It seems – as with TSA tourist data – investors are embracing whatever offers hope of recovery. In this case, it was higher than expected revenue, suggesting that there could be a significant demand for cruises when Royal Caribbean returns to the sea.
And it’s not just Royal Caribbean: Shares of Carnival Corp. (NYSE: CCL) and Norwegian Cruise Line Holdings (NASDAQ: NCLH) has also increased by more than 8% after the announcement of Royal Caribbean earnings.
But it won’t just go smoothly from here. The CDC (Center for Disease Control) still has cruise ships on “no sails” command, and it is likely that that will be renewed as the coronavirus pandemic worsens. Major operators have managed to have substantial cash reserves on their books, but at the current rate of burning, they will all have huge debts to settle. even when the pandemic has subsided. Like a melting block of ice, their margin of safety gets slightly smaller with each passing month, and the risk of permanent losses for investors grows.
Oxygen income: Buy rumors, sell news?
Occidental Petroleum’s shares rose nearly 7% today as investors predict second-quarter earnings after the bell. However, once the issue fell, the after-hours selloff began, with shares down about 5%.
Why plummeted? In short, a quarter to look forward to. Oil demand and prices fell in the second quarter and as a result Oxygen lost $ 8.4 billion. Most of those losses were $ 6.6 billion decline, greatly reducing the value of oil and gas assets.
The company said it had reduced its expected cost structure by $ 1.5 billion, but investors continued to focus on the biggest risk: debt. Oxygen still has a significant debt due over the next few years, but limited access to capital. In June, the company sold $ 2 billion of bonds, all of which pay interest at 8% or higher.
Can the company cut and refinance itself to get rid of the clutter that it caused itself following the Anadarko acquisition? As of now, costs seem very high, and there is still a very real risk that bankruptcy may be the only path into the future.
In a relatively quiet week, notable names set to announce quarterly results include food service delivery giant Sysco (NYSE: SYY), reported August 11; network and communications equipment manufacturer Cisco systems (NASDAQ: CSCO), reported on August 12; and high-end fashion retailer Carpet (NYSE: TPR), reported on August 13. Check back here to see more closely as earnings are announced.