United Airlines Holdings (UAL) has warned employees that it has seen a sharp drop in bookings in the last few weeks.
Bookings at United’s Newark hub were at 16% of July 2019 levels as of July 1. That rate is roughly half of the level a few weeks ago when it looked like air travel was recovering.
The problem is especially acute at Newark because New York, New Jersey, and Connecticut have added new quarantine rules following a spike in coronavirus cases in the South and West. Now United is waiting to see if it will experience a similar drop at its Chicago hub after that city placed new restrictions on travelers from more than a dozen states.
Stocks in China were flat or lower after yesterday’s big rally with the Shanghai Composite gaining just 0.37% after surging 5.71% yesterday. The iShares China Large Cap ETF (FXI), which gained 9.50% yesterday had slid 2.29% as of 2:30 p.m. New York time today. Part of that is par for the course after a huge gain. Part is also due to a downgrade today in forecasted growth in 2020 (to a forecasted contraction of 8.37% from a prior forecast of a 7.4% contraction) and 2021 from the European Union that has reminded investors and traders that one of the consequences of building the world’s greatest export economy is that you need someone to sell to. And with both the United States and Europe looking at contraction in 2020, China will be hard-pressed to grow exports in 2020.
The United announcement has been especially hard on shares of companies with a “You can lead a horse to water, but you can’t make consumers buy if they don’t feel safe” problem. Besides the 5.38% loss for United shares as of 2:30 p.m New York time, Delta Airlines (DAL) was off 3,76% and American Airlines (AAL) showed a 5.43% drop.
Cruise ship operator Carnival (CCL) was down 3.72% and Shake Shack (SHAK) retreated 5.11% by 2:30 p.m.
I don’t see much of a pattern in the numbers from the last two sessions. The market is being whipsawed as traders try to generate short term profits from daily or intraday trades. There’s not much conviction here beyond that time frame.
And even within that short-term horizon, stocks are putting in substantial intraday moves with airlines, fast-food companies, and emerging market indexes showing substantial moves lower from trading in the morning to afternoon action.
Earlier, for example, the iShares MSCI Brazil ETF (EWZ) and the iShares MSCI Mexico ETF (EWW) were both up on the day. As of 2:30 p.m. New York time, however, the ETFs were down 1.92% and 1.63%, respectively.
As of 2:30 p.m. the Standard & Poor 500 was down 0.27% and the Dow Jones Industrial Average was off 0.78%. The Russell 2000 small cap index was lower by 0.40% and the iShares MSCI Emerging Markets ETF (EEM) had lost 1.21%. The NASDAQ Composite was the only major index ahead as of 2:30 with a gain of 0.23%.
And selling got heavier to the close. United finished down 7.55% on the day, for example. Shake Shack dropped to a loss of 6.55% for the day. The EWZ Brazil ETF closed off 2.20% and the Mexico ETF was down 2.42% at the end of the session. The Emerging Markets ETF slid to a 67% loss of for the day.
The NASDAQ Composite wasn’t able to preserve it’s status as the only index in the green–for the day it closed down 0.86%. The S&P 500 moved down to a 1.08% loss and the Dow closed off 1.5%. The Russell showed a 1.86% loss by the end of the day.