Travel, Tourism Stocks Down as Mounting Coronavirus Cases Roil Markets
February 24 2020 - 1:01PM
Dow Jones News
By Dave Sebastian
Shares of companies with exposure to travel and tourism dropped
Monday as U.S. stocks skid amid mounting cases of novel coronavirus
outside of China.
Italy Monday reported a sixth death from the coronavirus, as
authorities imposed quarantines and other restrictions in the
country's economic heartland to fight what is now the world's
third-biggest national outbreak after those in China and South
Korea.
American Airlines Group Inc. shares slid about 10% to $25.04.
Delta Air Lines Inc.'s stock fell about 7.2% to $53.72, United
Airlines Holdings Inc.'s stock fell 4.1% to $74.78 and Southwest
Airlines Co. shares fell 4.7% to $53.90. The epidemic, originating
in the central Chinese city of Wuhan, has disrupted global travel
and supply chains, with airlines canceling flights to China.
American depositary shares of Chinese airlines declined, with
China Southern Airlines Co. falling 5.2% to $27.82 and China
Eastern Airlines Corp. falling 4.6% to $22.64.
Stocks of cruise companies also took a hit. Cruises have drawn
outsize attention for becoming incubators for the pathogen. Shares
of Carnival Corp., whose Diamond Princess cruise turned into a
quarantine for more than 600 coronavirus patients, fell around 7%
to $38.75.
Shares of Norwegian Cruise Line Holdings Ltd., which despite
having no base in China has canceled voyages in Asia through
September, fell about 8.7% to $42.90. Royal Caribbean Cruises Ltd.
shares fell around 7% to $98.77.
The selloff has dragged down stocks of online-travel agencies
and metasearch companies. Booking Holdings Inc. shares fell 6.8% to
$1797.08, Expedia Group Inc. shares fell 6.9% to $111.88 and
TripAdvisor Inc. shares fell 4.5% to $27.01. American depositary
shares of the Chinese online-travel agency Trip.com Group Ltd. fell
5.5% to $31.23.
Lodging companies' stocks also sold off. Hyatt Hotels Corp.
shares fell 6.1% to $89.15, Marriott International Inc. shares fell
4.9% to $136.28 and Hilton Worldwide Holdings Inc. shares fell 4.3%
to $104.88. American depositary shares of InterContinental Hotels
Group PLC declined 6.1% to $61.13.
Though opportunities are likely to resurface after the epidemic
resolves, the effect on leisure companies could be longer term,
said Chris Gaffney, the president for world markets at TIAA
Bank.
The epidemic's expansion outside of China "sent shivers into
investors that this could grow into more of a pandemic," Mr.
Gaffney told The Wall Street Journal. World Health Organization
Director-General Tedros Adhanom Ghebreyesus Monday said the
epidemic hasn't morphed into a pandemic, though it has the
potential to.
An epidemic generally refers to a disease that has spread over a
large geographic area over a long period of time. A pandemic is an
epidemic that has spread over many continents and countries,
affecting large numbers of people.
In Macau, the two-week closure of casinos has weighed on the
gaming enclave's gross gaming revenue, though many have resumed
operations last week. Shares of Wynn Resorts Ltd. fell about 3.8%
to $123.05, MGM Resorts International declined 4.7% to $29.92 and
Las Vegas Sands Corp. fell 3.9% to $63.07.
With individual travel visas for visits by mainland China
residents and group travel suspended, Macau's gross gaming revenue
could plunge 90% in February and 80% in March, assuming no
significant improvement in travel, according to Bernstein Research
analyst Vitaly Umansky.
Lauren Goodwin, an economist and multi-asset portfolio
strategist at New York Life Investments, said the asset manager is
defensive on its portfolio as the epidemic remains a risk over the
long-term unless infection cases diminish or the development of
antiviral drugs materially progress.
"The more this virus prevails, the more likely it is that the
Fed will step in," Ms. Goodwin told the Journal. "When you have
monetary accommodation, you can't have equity prices move
higher."
The Dow Jones Industrial Average fell 3.3% to 28041.12 in early
afternoon trading.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
February 24, 2020 12:46 ET (17:46 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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