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📈 Airline Stocks in the Bargain Bin
Reddit rallies after slump, Unilever speeds up sale of food brands, Stitch Fix stock rallies, Tesla shares rise after bad day, Airline CEOs warn of domestic slowdown
Evelio Silvera
March 12, 2025
Good morning.
⚡ The Fast Five → Reddit rallies after slump, Unilever speeds up sale of food brands, Stitch Fix stock rallies, Tesla shares rise after bad day, Airline CEOs warn of domestic slowdown
🔎 Market Trends → US stocks fall, adding to biggest selloff in months; US Futures Rise Ahead of Key Inflation Report
And now…
⏱️ Your 5-minute briefing for Wednesday, March 12, 2025:
MARKET BRIEF
Before the Open
As of market close 03/11/2025.
Pre-Market
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Fear & Greed
Markets in Review
Markets Slip as Tariff Jitters Cloud Inflation Outlook
The Dow dropped 1.1% to 41,433.5, while the S&P 500 declined 0.8% to 5,572.1. The Nasdaq dipped 0.2% to 17,436.1 as investors weighed tariff uncertainty ahead of Wednesday’s consumer inflation report. Industrials led the declines.
The Big Picture:
Trade tensions took center stage as Ontario agreed to pause its planned 25% surcharge on electricity exports to the U.S., setting the stage for renewed trade discussions. Meanwhile, President Trump backed off plans to double steel and aluminum tariffs on Canadian imports after previously threatening an escalation.
Bond markets reacted with caution. The 10-year Treasury yield climbed 6.9 basis points to 4.28%, while the 2-year yield rose 5.5 basis points to 3.95% as traders braced for inflation data. Consensus estimates peg February's CPI at 2.9% year-over-year, down from January’s 3% rise.
West Texas Intermediate crude gained 0.8% to $66.56 per barrel, but trade uncertainty capped further gains.
Market Movers:
Verizon (VZ) slid 6.6%, the biggest drop on the Dow and among the worst on the S&P 500, after its chief revenue officer warned of soft Q1 subscriber growth.
Delta Air Lines (DAL) fell 7.3% after the carrier trimmed its Q1 financial outlook, citing lingering demand challenges.
Southwest Airlines (LUV) jumped 8.3%, second-best on the S&P 500, as it lowered revenue guidance but announced plans to charge for checked bags, a move expected to boost revenue.
GE Vernova (GEV) gained 5.2% after its power conversion and storage unit announced a potential multi-year collaboration with PyroGenesis.
What They’re Saying:
"A softer inflation report should calm market nerves, but policymakers remain cautious," Stifel wrote in a Tuesday note. "Disinflation remains in play, but upside risks linger."
WHAT WE’RE WATCHING
Events
Today:
Bureau of Labor Statistics - Consumer Price Index (CPI) - 8:30am
Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Today: Federal Reserve - Fed Chair Powell Testifies - 10:00am
Why You Should Care: As head of the central bank, which controls short term interest rates, he has more influence over the nation's currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
Today: White House - President Trump Speaks - 3:48pm
Why You Should Care: Due to hold a press conference about his latest executive orders at the White House, in Washington DC.
Earnings Reports
Today: Adobe, Williams-Sonoma, American Eagle Outfitters, Arcos Dorados, Hello Group, Vivid Seats, Crown Castle, Lennar
Tomorrow: Dollar General, Ulta Beauty, DocuSign, G-III Apparel Group, Xponential Fitness, Wheaton Precious Metals, Rubrik, ServiceTitan
MARKET BRIEF
Leading News
Airline Travel Slowdown: Contrarian Signal Flashing "Buy"?
Photo Credit: Christian Lambert
Why it matters:
Airlines' profit warnings reveal passenger demand weakness precisely when most investors are fleeing the sector — potentially creating a classic opportunity for contrarians with patience.
Zoom Out:
Major carriers including American (AAL), Delta (DAL), and Southwest (LUV) are trimming Q1 forecasts amid softening domestic leisure travel. Their CEOs cite "macroeconomic uncertainty" and government travel declines following the Trump administration's policy shifts.
Yet beneath these headline-grabbing warnings lies a more nuanced picture. International and premium travel demand remain robust, suggesting this may be a temporary sentiment shift rather than structural decline.
Key Insights:
Divergent segments tell the real story: While domestic leisure bookings are faltering in March, premium cabins continue showing strength — historically a leading indicator that business confidence remains intact despite short-term caution.
Government travel has "fallen off" since January's inauguration, United CEO Scott Kirby noted, affecting approximately 2% of their business directly and another 2-3% indirectly through related contractors.
Fleet optimization accelerating: United is retiring 21 aircraft early, avoiding $100 million in engine overhaul costs — the kind of balance sheet discipline that typically precedes sector recovery.
Market Pulse:
"I think people are cautious and they're pulling back a little bit on travel, not in an organized manner but just kind of waiting to see what's going to transpire," explained Delta CEO Ed Bastian, echoing the temporary nature of current headwinds.
Bull’s Take:
History suggests that when major carriers simultaneously trim guidance, we're often near a bottoming process. Patient investors might consider establishing positions while sentiment remains poor, particularly in operators with strong international exposure and premium service offerings.
Headlines
Reddit rallies after three-day slump as analyst calls sell-off ‘excessive’ (link)
Microsoft is open to using natural gas to power AI data centers to keep up with demand (link)
Unilever to Speed Up Sale of Food Brands, CEO Says (link)
Tesla stock rises after worst day in almost 5 years as Musk says US production will double (link)
Waymo expands its robotaxi service again, this time to parts of Silicon Valley (link)
Stitch Fix’s stock rallies after styling service boosts full-year sales forecast (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to alifarhat79