It’s been a bumpy first week of the year for travel stocks.
Airline and cruise operators rebounded for a second day in a row on Friday, a reversal from the prior two sessions.
American Airlines (AAL) gained more than 3% midday, adding to Thursday's 1% gain when oil prices dipped, signaling lower fuel costs for airline operators.
American had been on a losing streak for the prior seven sessions, exacerbated earlier this week by images of a Japan Airlines crash in Tokyo.
Delta (DAL) and United (UAL) also extended gains on Friday, up more than 3.5% over the past two days.
Cruise operator Carnival (CCL) was trading almost 4% higher on Friday following a Wells Fargo rating upgrade to Overweight from Equal-weight, with analysts at the firm maintaining a $22 stock price target.
Peer Norwegian Cruise Line (NCLH) was trading 1.5% higher, despite a downgrade from Wells Fargo analysts to Equal-weight from Overweight with a price target of $18.
Travel stocks are coming off a strong year, particularly the cruise liners. Carnival was up more than 130% in 2023, while Norwegian Cruise Line gained more than 60% last year.
Shares of major cruise operators and airlines rallied in the last quarter of the year amid a decline in oil prices.
"Airline stocks tend to do well when energy prices are lower, in our view, given that it reduces the need for carriers to pass on the increase in fuel cost to passengers, translating to lower airfares, which should translate to higher passenger demand and positive earnings, assuming energy prices do not rise," Jonnathan Handshoe, equity analyst at CFRA Research told Yahoo Finance.
Travel stocks also rallied in early December after Federal Reserve Chairman Jerome Powell hinted at rate cuts this year, signaling looser monetary conditions.
Despite gains in the prior two sessions, American, Norwegian Cruise Line, and Carnival are on pace to end the shortened first week of 2024 in negative territory.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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