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Travel stocks surged Wednesday afternoon, after President Trump announced that he would pause most of the tariffs for 90 days. These tariffs have been weighing heavily on the stock market over the past week.
United Airlines (UAL) was the best-performing stock in the S&P 500 Wednesday, with shares leaping 25% in recent trading. Delta Air Lines shares are up over 22%. Norwegian Cruise Line Holdings Inc. (NCLH), and Carnival Cruise Line (CCL) both saw their shares rise by 18% each.
Delta Airlines reported Wednesday better-than expected first quarter results, but it lowered its earnings outlook due to the uncertainty surrounding tariffs and the economy. Ed Bastian, CEO of Delta Airlines, warned that leisure and corporate travel demand had stalled by late February and said that recent consumer behavior was similar to what one would expect during a recession.
Trump’s 90-day tariff pause prompted a broad stock rally, lifting the Nasdaq Composite about 11% and the S&P 500 more than 8%. Investors hope that the 90-day tariff pause will allow countries targeted by Trump to negotiate more, leading to concessions or lower tariffs for U.S. businesses.
Airlines and Cruise Companies Sensitive To Slowdowns
Airlines and cruise operators have less direct impact on high tariffs compared to companies that manufacture and sell goods. Their services are highly discretionary and therefore vulnerable to economic slowdowns, as well as a deteriorating consumer confidence.
U.S. Airlines are also experiencing a drop in demand from international travelers. Some are avoiding American vacations due to the Trump administration’s animosity towards U.S. allies such as the European Union and Canada. Trump’s harsh crackdown on immigration has also deterred some potential travelers, and prompted many countries to issue warnings against traveling to the U.S.
