Airline Stocks Soar as Inflation Report Shows Ticket Prices Up and Gasoline Costs Down

Airline stocks experienced a significant rally on Tuesday after the release of July’s inflation report. The report showed a jump in ticket prices while gasoline costs, a major expense for the industry, dropped sharply. This rare double boost provided a positive outlook for carriers.

Airline fares saw a 4% increase from June, while gasoline prices dropped 1. 9% over the month and are now 9% lower compared to last year. This means that airlines can charge more for tickets while paying less for one of their biggest operating costs. This favorable situation led to a sharp increase in airline shares.

By late morning in New York, Alaska Air Group Inc., American Airlines Group Inc., Delta Air Lines Inc., and United Airlines Holdings Inc.were each up between 7% and 8%. The U. S. Global JETS ETF, a key benchmark for the industry, also saw a significant increase of 5. 7%.

The Dow Jones Transportation Index, which includes major airlines, jumped 2. 8%, outpacing the broader market’s gains and eyeing its best performance since May.

Mixed News for U. S.

While the inflation report provided positive news for airlines, it also showed a mixed outlook for U. S. consumers. While gasoline prices provided relief at the pump, several everyday expenses saw an increase.

Transportation services saw a notable price jump of 0. 8% for the month and are currently 3. 5% higher than a year ago. Medical care services also saw an acceleration, rising 0. 8% in July and 4. 3% year-over-year.

Used car prices also rose by 0. 5% in the month and 4. 8% from last year. Gasoline prices fell by 1. 9%, or 9% on an annual basis, helping to contain headline inflation. Meanwhile, energy services saw a 0. 3% monthly decline, though their annual gain remains steep at 7. 2%.

Grocery prices, classified as “food at home,” were flat in July but still 2. 9% higher than last year. Dining out, or “food away from home,” saw a 0. 3% increase in the month and is up 3. 9% over the past year. Shelter costs, the largest component of CPI, were up 0. 2% for the month and 3. 7% over the year.

Investors React Positively to Transportation and Healthcare Stocks

The positive news for airlines spilled over into other travel-related industries, such as cruise lines and shipping and logistics companies. Carnival Corp. , Royal Caribbean Group, and Norwegian Cruise Line Holdings Ltd.all saw an increase in their stock prices.

Shipping and logistics stocks also experienced gains, with Old Dominion Freight Line Inc.and FedEx Corp. seeing a significant increase. Ridesharing company Uber Technologies Inc.