Travel and leisure stocks and ETFs make major moves on Friday, following a better-than-expected October jobs report and a new development in the coronavirus battle that’s boosting excitement for economic recovery.
Economists were optimistic about a broad-based increase in hiring in October, suggesting the economy is recovering from the third-quarter slump caused by the coronavirus and could accelerate faster than expected in the fourth quarter.
Employment rose by 531,000 during the month, with new jobs in a plethora of categories such as manufacturing, hospitality, and professional and business services. The unemployment rate fell to 4.6%, remaining below the normally ideal level of 5%. Revisions to data from previous months also added a total of 235,000 additional payrolls in August and September.
Michael Gapen, chief US economist at Barclays, said the jobs report shows the economy is back on track after a growth hiccup in the third quarter. “We’re not going to see what we saw in the first half, but we’re not a 2% economy,” Gapen said.
“We are picking up speed as the delta wave subsides and given the revisions we have weathered the storm,” said Diane Swonk, chief economist at Grant Thornton. “It suppressed spending because people were afraid of contagion during the delta wave, but it didn’t derail underlying employment, and now we’re picking up.”
The news was particularly beneficial for the travel and leisure industry, which has seen a tumultuous evolution since the first hit of the pandemic, prompting a wave of layoffs in the restaurant and airline sectors.
As the holiday season approaches, however, strong restaurant and bar hiring has once again helped the leisure and hospitality sector lead the country’s employment numbers. month. Employers added nearly 120,000 cooks, servers and other restaurant workers to help lift the overall leisure sector by 164,000 for the month.
Employment in the leisure and hospitality sector increased by 2.4 million in 2021, although it is still down by 1.4 million, or 8.2%, since February 2020, the start of the pandemic.
The news boosted classic reopening games, as airlines such as United Airlines and American Airlines climbed more than 6% each, helping the US Global Jets ETFs (JETS) to mark a 6% gain amid the climb, while Carnival jumped 9% and Norwegian Cruise Line rebounded more than 8%.
The Invesco Dynamic Leisure and Entertainment (PEJ) ETF was another fund that saw gains on the new data. The ETF jumped 3.82% on Friday, hitting a five-year intraday high.
According to Invesco, “The Invesco Dynamic Leisure and Entertainment ETF (Fund) is based on the Dynamic Leisure & Entertainment Intellidex℠ (Index). The Fund will normally invest at least 90% of its total assets in common stocks which make up the Index.The Index is designed to provide capital appreciation by carefully evaluating companies against a variety of investment merit criteria, including: price momentum, earnings momentum, quality, stock direction and value. The index is comprised of the common stocks of 30 US leisure and entertainment companies. These are companies primarily engaged in the design, production or distribution of goods or services. in the leisure and entertainment sectors The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August and November.
In addition to positive employment data in the travel and leisure sector, a key development from Pfizer related to its easy-to-administer coronavirus pill has also catalyzed enthusiasm for a smooth reopening, sending prices skyrocketing. shares of airlines and cruise lines.
Pfizer shares rose more than 7% after the company said its coronavirus drug, when used with an HIV drug, reduced the risk of hospitalization by 89%. Pfizer board member Dr. Scott Gottlieb said Friday that the pandemic could be over in the United States by the time President Biden’s workplace vaccination mandates take effect in early January.
This was great news for the iShares US Pharmaceuticals ETF (IHE)which climbed more than 1.3% on Friday.
The news sent the Direxion Daily Travel & Vacation Bull 2X Shares (OOTO) jumping more than 13% more. Direxion Daily Travel & Vacation Bull 2X shares target daily investment results, before fees and expenses, of 200% of the performance of the BlueStar® Travel and Vacation Index.
According to Direxion, “The BlueStar® Travel and Vacation Index (BTOURNTR) is provided by MV Index Solutions GmbH and is comprised of US-listed stocks, including certificates of deposit, of companies that are corporations of” travel and vacation”, as defined by the Index Provider. To be eligible for inclusion in the Index, a company must either (a) derive 25% or more of its revenue from, or spend 25% or more of its annual budget to operate theme parks and/or hotels or (b) derive 50% or more of its revenue from the following activities or devote 50% or more of its annual budget to the following activities: 1. Hotel accommodations 2. Commercial airlines 3. Resort casinos 4. Hotel timeshares 5. Ski resorts 6. Cruises 7. Hotel real estate investment companies 8. Performing arts centers 9. Online Travel and Event Booking 10. Specialty Travel and Experiences és (such as passenger travel in outer space) and 11. Operation of theme parks.
The positive jobs data also had a positive effect on equities, with the Dow Jones Industrial Average gaining 240 points, while the S&P 500 rose 0.6%, heading for its seventh consecutive positive day. The Nasdaq Composite also added up to 0.6%, before all three indexes pared their gains. However, all three major benchmarks marked their respective intraday highs during the session.
Job gains for the month of October totaled 531,000, while consensus estimates called for an additional 450,000 jobs, according to Dow Jones. The report also revised September’s disappointing number up to 312,000 job gains from 194,000 previously, and added a similar amount to its August figure.
“Markets are rejoicing this morning on a much better-than-expected payrolls report as nonfarm payrolls beat expectations,” said Cliff Hodge, CIO of Cornerstone Wealth. “The gains were broad-based across all industries, and manufacturing was a real bright spot.”
All three major averages are on track to end the week higher. The Dow Jones is up 1.3% on the week, while the S&P 500 is up 2.2% and the Nasdaq Composite is up 3.3%.
The SPDR Dow Jones Industrial Average ETF (DIA)the SPDR S&P 500 ETF Trust (SPY)and the Invesco QQQ Trust (QQQ) were all equally green at 1:30 p.m. EST Friday.
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