The market is moving higher on Tuesday and travel and entertainment stocks are among the biggest movers. After weeks of fears about the impact of the omicron variant of COVID-19, investors are now brushing it aside.
The most notable movers were Melco Resorts (NASDAQ: MLCO), Expedia Group (NASDAQ: EXPE), and Ashford Hospitality Trust (NYSE: AHT), all jumping double-digits at their high today. Booking Holdings (NASDAQ: BKNG), Marriott International (NASDAQ: MAR), MGM Resorts (NYSE: MGM), and Trip.com (NASDAQ: TCOM) were also up high single digits today.
Data source: Google Finance.
Omicron continues to spread around the U.S., with the strain now accounting for 73% of new cases, according to the Centers for Disease Control and Prevention. And health officials are doing everything they can to ease the economic pain, from pushing more boosters to offering more at-home tests.
The fear for weeks has been that lockdowns were inevitable to slow the spread of omicron, but the market seems to be thinking that won't happen, at least in the U.S. Not only are businesses tired of shutting down, but consumers are tired of being on lockdown, as evidenced by record gambling levels in Las Vegas over the last few months.
Travel and leisure stocks are moving higher in lockstep because investors are bullish that there isn't going to be a big disruption on the horizon. Analysts seem to be on board with that view given that Goldman Sachs, UBS, and Cowen all picked travel stocks to soar in 2022.
If you've been watching travel stocks over the last few weeks, you've seen a volatile ride as investors price in lockdowns or weaker travel and then get more bullish the next day. If the last few months are any indication, there will at least be a large percentage of people willing to travel and go to hotels and casinos, keeping them busy even as omicron spreads.
The most bullish scenario is that once omicron is past its peak we will be through the worst of the pandemic. The world has been through variant after variant with no end to the pandemic in sight. Government officials don't seem to be willing to enact more lockdowns and people now have more choices and knowledge about how to avoid risks if they choose to. Investors are betting that in time that will leave the world in a more "normal" place, which could lead to a boom in travel over the next few years.
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Travis Hoium owns MGM Resorts International. The Motley Fool owns and recommends Booking Holdings. The Motley Fool recommends Marriott International and recommends the following options: long January 2023 $115 calls on Marriott International. The Motley Fool has a disclosure policy.