Airline stocks enjoyed a broad rally Monday, as investors got a double dose of upbeat news, one on the COVID-19 vaccine front and the other via a bullish pattern in the sector ETF’s chart.
Add to that government data showing that the number of travelers in the past week snapped a three-week streak of declines, and investors had a reason to look past increasingly worrisome numbers of new coronavirus cases and deaths.
The U.S. Global Jets exchange-traded fund (PSE:JETS) rallied 3.5% in afternoon trading, putting it on track for the highest close since June 8. The rally comes as the S&P 500 index (S&P:SPX) gained 0.8%.
The ETF got big lift after Moderna Inc. (NAS:MRNA) said before the open that its COVID-19 vaccine candidate mRNA-1273 demonstrated 94.5% efficacy , and that the vaccine appeared to remain stable for 30 days in a standard refrigerator .
That followed Pfizer Inc.’s (NYS:PFE) and BioNTech SE’s (NAS:BNTX) announcement last week that their vaccine candidate demonstrated “ more than 90%” efficacy , while that vaccine had to be stored at “ultralow” temperatures .
Among the ETF’s more-active components, share of American Airlines Group Inc. (NAS:AAL) rallied 4.0%, United Airlines Holdings Inc. (NAS:UAL) climbed 4.7%, Delta Airline Lines Inc. (NYS:DAL) advanced 3.6%, Southwest Airlines Co. (NYS:LUV) hiked up 3.0% and JetBlue Airways Corp. (NAS:JBLU) rallied 4.5%.
Elsewhere, shares of Spirit Airlines Inc. (NYS:SAVE) rose 2.;5%, Alaska Air Group Inc. (NYS:ALK) gained 4.y%, Mesa Air Group Inc. (NAS:MESA) soared 11.3% and Hawaiian Airlines parent Hawaiian Holdings Inc. (NAS:HA) tacked on 1.4%.
Analyst Robert Stallard at Vertical Research Partners said Monday that after the recent vaccine news he believes the “tide has now turned” on the coronavirus. Although the recovery path is likely to be bumpy, he thinks the overall trajectory for aviation will be “positive” over the next year.
With Monday’s gain, the Jets ETF’s 50-day moving average (50-DMA), which many use as a guide to the short- to medium-term trends, rose to $17.885. That put the 50-DMA above the 200-day moving average (200-DMA), which many view as a dividing line between longer-term uptrends and downtrends, for the first time since March 4. The 200-DMA extended to $17.834.
Many Wall Street chart watchers believe the 50-DMA crossing above the 200-DMA, referred to as a “golden cross,” marks the spot a longer-term downtrend morphs into a longer-term uptrend. Read more about golden crosses .
Also providing airline investors a lift Monday, data from the Transportation Security Administration showed that the number of travelers rose last week for the first time in four weeks.
The upbeat news comes in the face of increasingly grim data on new coronavirus cases, hospitalizations and deaths, prompting new restrictions on gatherings in different states.
The number of people going through TSA checkpoints totaled 5.53 million for the week ended Sunday, for a daily average of 790,232, according to a MarketWatch analysis of TSA throughput data . That’s up from a daily average of 783,381 travelers the week before.
The latest week marked a 64.8% decline from the average number of daily travelers in the same week a year ago, a slight improvement from the 65.5% decline in daily average travelers the previous week.
The daily average hasn’t been below 700,000 since the week ended Aug. 30, and is well above the post-pandemic low of 97,799 during the week ended April 19.
Raymond James analyst Savanthi Syth said that despite signs that positive momentum in airline bookings and revenue seen in October has stalled in the first two weeks of November, the vaccine news suggests the “lifeboats are here.” It also provides increasing hopes that other vaccines will be coming soon.
The Jets ETF has surged 20.0% over the past three months but was still down lost 33.8% this year, while the S&P 500 has climbed 11.9% year to date.