Dow Jones: Airline stocks up sharply as confidence grows on back of vaccinations
Muted market opening ahead of this week’s Fed meeting belies increasing optimism
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At 11am in New York, the Dow stood at 32,787 up just eight points; the S&P 500 was at 3,943, and the Nasdaq at 13,369 – all essentially flat on the day.
Last week saw the three main market indices log their best week in six, and investors are now preparing for the Federal Reserve’s meeting this week amid caution over rising borrowing costs spurred by the massive fiscal stimulus of the $1.9 trillion American Rescue Plan.
A loosening of Covid-19 restrictions in the US and rising confidence over the roll-out of vaccines has triggered a steady rise in leisure booking. Shares in American Airlines and United Airlines both surged 9 per cent, Delta Air Lines was up 4.5 per cent, and JetBlue 5.3 per cent. Boeing, while down today, has performed impressively over the past month.
Air travel passenger numbers over the weekend have hit levels not seen since before the pandemic as Americans begin to take to the skies again. They remain 45 per cent below 2019 levels, showing there is still a long road ahead for airlines.
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The S&P 500 notched a record high for the first time in nearly a month last week as approval of one of the largest stimulus packages in US history and vaccine rollouts fuelled demand for economy-linked stocks such as banks, energy, materials at the cost of tech names with lofty valuations.
Investor fears of an increase in inflation remain, and, in response, the possibility of a tapering of the Fed’s easy monetary policy.
“The US economy looks in a better shape than most other developed economies,” said Hussein Sayed, chief market strategist at FXTM.
“Despite the rosier economic outlook, this week’s Fed meeting is expected to be absent of major policy changes.”
At the end of Fed’s two-day meeting on Wednesday, policymakers are expected to forecast that the US economy will grow in 2021 at the fastest rate in decades while reiterating their dovish stance for the foreseeable future.
With reporting from Reuters
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