Oil and gas exchange-traded funds (ETFs) have reached their highest levels since June 2022, with the XOP fund showcasing year-to-date gains of nearly 30%. This uptick comes amid rising oil prices, which have stirred investor concerns, particularly related to the escalating tensions involving the U.S. and Iran. As a result, major U.S. airlines have seen a downward trend in their stock prices, fueled by worries about operational costs linked to higher oil prices.
On Thursday, shares of significant airline companies, including United Airlines and Delta Air Lines, fell more than 5%, marking them as some of the worst performers within the S&P 500. Other carriers such as Southwest Airlines, American Airlines, and JetBlue Airways experienced declines of over 4%. Earlier in the week, airline stocks initially reacted negatively to U.S. strikes on Iran but managed to recover somewhat. However, these stocks have shown declines of between 8% and nearly 11% for the week.
In the cruising sector, Wells Fargo has maintained an optimistic outlook for Carnival ahead of its earnings report, increasing its price target from $38 to $40. Analyst Trey Bowers anticipates the cruise line will surpass earnings expectations, while management exhibits a cautious approach to revising guidance due to geopolitical tensions.
U.S. equities opened lower on Thursday, with the S&P 500 dropping by 0.4% and the Dow Jones Industrial Average declining by 398 points, representing a 0.8% decrease. Notable premarket moves included BJ’s Wholesale Club, whose stock fell by 4% after its full-year guidance failed to meet expectations. Conversely, shares of Trade Desk rebounded nearly 21% on reports of early negotiations with OpenAI to sell advertisements. Burlington Stores’ stock surged 6% following a strong earnings report.
In economic news, productivity and labor costs in the fourth quarter exceeded forecasts, with productivity rising by 2.8% and labor costs similarly increasing by 2.8%. Jobless claims remained relatively stable, with filings totaling 213,000, just below expectations.
Asian markets exhibited contrasting dynamics, with South Korea’s Kospi index recording its best day since 2008, surging nearly 12%. This sharp rebound followed several days of volatility, driven by concerns over rising oil prices.
Market participants continue to monitor fluctuations in oil prices, which increased on Thursday. West Texas Intermediate futures rose by 2.5%, reaching $76.56 per barrel, while Brent crude prices moved up by 2% to $83.03 per barrel.
As European markets opened lower due to geopolitical uncertainty, particular attention was drawn to Spain’s strained relationship with U.S. President Donald Trump regarding military actions in the Middle East. In response to airline stocks and rising oil prices, analysts have advised investors to adopt a cautious stance in the current geopolitical climate.
