U.S. airline and cruise stocks rallied across the board today. JetBlue and Royal Caribbean led the gains, each surging over 4%. American Airlines, Alaska Airlines, United Airlines, Carnival Corporation, and Norwegian Cruise Line all climbed more than 3%, while Southwest Airlines and Delta Air Lines rose over 2%.
The sector-wide upswing was primary fueled by a sharp retreat in energy costs. U.S. West Texas Intermediate (WTI) crude futures plunged more than 4% intraday, slipping below the psychological $70-per-barrel threshold to hit its lowest level since March 2. The drop effectively wiped out all premium since the outbreak of hostilities involving Iran. Oil prices faced mounting downward pressure from shifting market dynamics, including growing anticipation of defused tensions in the Middle East, the expected return of Iranian crude supplies, and lingering fears that sticky U.S. inflation could prompt further Fed rate hikes.
Adding to the bullish momentum, UBS recently released a research note highlighting that jet fuel prices have tumbled roughly 30% over the past month, while travel demand remains resilient despite rising airfairs. Ahead of the upcoming second-quarter earnings season, the bank designated American Airlines and United Airlines as its top picks within the industry, while reiterating its "Buy" ratings on Delta, Southwest, and Alaska Airlines.
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