US airline stocks dropped on Monday, with United Airlines falling 2.6%, after President Donald Trump said his administration is not considering a financial rescue for the industry. The announcement adds to the intense pressure on carriers already struggling with jet fuel prices that have soared during the war with Iran.
"There were some authorities that were explored to see if we could help them get a lifeline. And in the end the legal guys decided that those authorities wouldn’t apply in this situation," Kevin Hassett, director of the Council of Economic Advisers, said Sunday, referencing the administration's recent decision not to bail out the now-defunct Spirit Airlines.
The broader market showed resilience, with the S&P 500 edging up 0.1% from its record high. However, the gains were narrow, with losses concentrated in businesses exposed to high fuel costs and strained consumer spending. Royal Caribbean fell 4.6% and discount retailer Dollar General dropped 5.8%. Offsetting the losses were strong performers in tech, including Nvidia which gained 1.4%, and a 3% rise for Fox after strong earnings.
The president’s stance magnifies the economic fallout from the war with Iran, which has pushed Brent crude oil up 1.6% to $102.90 a barrel by shutting the Strait of Hormuz. While analysts from ING Think noted a "spark of hope" that talks between Trump and Chinese President Xi Jinping this week could pressure Iran, the path remains uncertain. For now, the high cost of fuel, averaging $4.48 per gallon in the US, continues to weigh on the airline industry's survival.
This article is for informational purposes only and does not constitute investment advice.
