Reasons for decline in airline stocks!!

Oil prices soared after U.S.-led air strikes in Yemen.

The major indexes finished mixed in Friday trading.

 

Airline Stocks Are Not Flying Well Today

By

Karishma Vanjani

The S&P 500 lost its momentum shortly after the open, dragged down by airline stocks.

The worst four performers in the S&P 500 this morning are all airlines: United Airlines down 9%, Delta Air Lines down 8.1%, American Airlines down 8.7% and Southwest Airlines down 5.3%.

Part of the pressure on airline stocks stems from a disappointing forecast from Delta. The airline estimated full-year 2024 earnings per share of between $6 and $7 versus the prior target of more than $7.

Higher oil prices pushed by U.S. and U.K. strikes against Houthi targets in Yemen also added some gloom to the sector.

The U.S. Global Jets ETF exchange-traded fund was down 4.5%, its largest percent decrease since June 2022. The S&P 500 opened with a gain but was recently trading flat.

United Airlines Holdings Inc.

UAL (U.S.: Nasdaq)

$39.78 USD-4.73-10.63%

Delta Air Lines Inc.

DAL (U.S.: NYSE)

$38.47 USD-3.79-8.97%

American Airlines Group Inc.

AAL (U.S.: Nasdaq)

$13.21 USD-1.38-9.46%

Southwest Airlines Co.

LUV (U.S.: NYSE)

$28.57 USD-1.27-4.26%

U.S. Global Jets ETF

JETS (U.S.: NYSE Arca)

$18.16 USD-0.97-5.07%

S&P 500

SPX (S&P US)

4783.833.590.08%

 

 

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On January 12, 2024, airline stocks fell sharply due to concerns about rising oil prices. How can we utilize this inflection point in our investments?
There is no right answer, but there is a history of oil price increases due to past war issues continuing to rise for several months over a long period of time. I think it would be a good idea to continue to watch it with interest and use it as a reference when making investments.

 

 

**Recent Events:**

* **January 2024 Air Strikes:** In January 2024, US-led air strikes against Houthi targets in Yemen did cause a temporary spike in oil prices. However, the price quickly returned to pre-strike levels within a few days, suggesting limited impact on the broader market. This aligns with historical trends where isolated events often have short-term effects but not sustained price increases.

**Challenges in Isolating Specific Factors:**

* **Multifaceted Influences:** Oil prices are influenced by a multitude of factors, including global demand, supply chain issues, economic and political instability, and even weather events. Isolating the impact of a single event like air strikes is virtually impossible due to the interplay of these variables.
* **Market Speculation:** Predictions about future events, including potential oil price wars, can trigger temporary price fluctuations due to speculative trading. However, these movements are often short-lived and don't necessarily translate into sustained price increases.

**Alternative Approach:**

Instead of focusing on a specific scenario, it might be more insightful to analyze historical data or current trends to understand the factors that typically drive sustained oil price increases. This can provide a broader picture of the oil market and how various events might impact future prices.