What Happened?
A number of stocks jumped in the afternoon session after WTI crude crashed 4.7% to $92.94 on Iran-US peace deal progress, providing direct relief to airlines, hotels, cruise lines, and online travel agents. Airlines spend a significant portion of operating costs on jet fuel, so a 5% drop in crude flows almost directly to airline margins.
Cruise lines and hotels also benefit from reduced bunker fuel and operating energy costs. Peace progress reduces geopolitical anxiety, which historically drives travel demand recovery within weeks. Lower oil cuts costs while lower yields make consumer financing for vacations cheaper. Also, recent consumer data revealed a surprising uptick in vacation plans.
Despite a broader decline in consumer confidence due to inflation, reports from The Conference Board revealed a notable shift in spending priorities. While consumers cut back on discretionary goods, they earmarked more funds for experiences. The May survey showed an increase in expected spending on hotels and airfare for personal travel, correlating with a rise in vacation intentions. This suggests that even with tighter budgets, consumers are prioritizing travel, providing a positive outlook for airlines, cruise lines, and hotel operators, especially with the summer season approaching.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Consumer Discretionary - Travel and Vacation Providers company Royal Caribbean (NYSE: RCL) jumped 3.9%. Is now the time to buy Royal Caribbean? Access our full analysis report here, it’s free.
- Consumer Discretionary - Travel and Vacation Providers company Viking (NYSE: VIK) jumped 4.4%. Is now the time to buy Viking? Access our full analysis report here, it’s free.
Zooming In On Viking (VIK)
Viking’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 12 days ago when the stock gained 7.6% on the news that the company reported solid first-quarter 2026 results that surpassed Wall Street's revenue expectations.
The company announced revenue of $1.05 billion, a 17.5% increase from the same period last year and a 3.9% beat against analyst estimates of $1.01 billion. While its adjusted loss per share of $0.11 was in line with expectations, Viking also delivered an upside surprise in profitability. Its adjusted EBITDA came in at $104.8 million, ahead of the $100.8 million consensus, and its operating margin improved to 1.1% from a negative 1% in the prior year's quarter. The stronger-than-expected revenue and improved operational efficiency appeared to fuel investor optimism about the cruise line's performance.
Viking is up 22.3% since the beginning of the year, and at $88.35 per share, has set a new 52-week high. Investors who bought $1,000 worth of Viking’s shares at the IPO in April 2024 would now be looking at an investment worth $3,385.
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