Airline Shares Swing Higher After Trump Suggests Aid For Industry In New Tweet

Last month when the market got smacked by frustration over sputtering stimulus talks, many investors bought the dip. 

Following yesterday’s late downturn after President Trump called off stimulus talks, the question becomes whether that same “buy the dip” mentality takes hold again. 

At least first thing, it appears to be. That’s in part because of a fresh presidential tweet on possible aid for airlines that sounded like a partial walk-back of yesterday’s stimulus retreat. This should be taken as a serious sign that something might happen, at least for the airlines, and it’s a good step either way. 

Even if airlines get help, though, it doesn’t necessarily mean a big rally. The way things have gone lately, nothing ever seems to be enough for the market. It’s generally had a “spoiled child” mentality on good news. 

It also remains headline-sensitive, and there’s not a lot of data or earnings around to blunt the impact of what’s going on in Washington. As noted here yesterday, investors should be careful not to make any major moves based on the hour-to-hour political developments. All the noise means volatility and quick swings could remain the flavor of the week. We saw Tuesday how quickly one headline can move the market. 

From The “Could Have Been Worse” Department…

While the late selloff yesterday was quick and violent, you could argue it wasn’t as steep as some might have thought. That seems especially true when you consider how so many investors appeared to be making bullish bets based on better odds of a stimulus, particularly for the airline industry. 

Airlines plunged steeply yesterday after the president’s announcement. Remember, a bunch of heavy hitters like Delta Air Lines, Inc. (NYSE: DAL), United Airlines Holdings Inc (NASDAQ: UAL) and American Airlines Group Inc (NASDAQ: AAL) are scheduled to report earnings over the next two weeks or so, making this an auspicious time for the sector. Many investors had been hoping airlines would be able to avoid furloughing employees if a stimulus came through.

The president’s Tweet this morning appeared to put help for the airlines back on the table, so we’ll see where things go. Airline stocks got some lift in pre-market trading. 

In other news, a couple of Fed speakers are scheduled Wednesday, and tomorrow brings the weekly initial jobless claims report. Expectations on Wall Street are for around 830,000 new claims, barely down from 837,000 the previous week. Weekly readings have really been stubborn about coming down. 

Another report to check is today’s crude production and supply reading from the U.S. government. Last week’s report showed a pretty good draw, possibly signaling decent demand for crude. We’ll see if that holds up. If it does, it could help tell a more positive consumer demand story. Crude remains just below $40 a barrel and we’ll see if it can get back to $40 and hold it. That’s the big test. 

Technicals And Techs

Tuesday’s selling took the SPX below its 50-day moving average …

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