Ebola worries spread chill over travel stocks
Investors backed away from travel industry stocks Wednesday as they considered how the USA's first reported case of the Ebola virus might affect consumers' desire to travel.
United Airlines said Wednesday that it had been told by the Centers for Disease Control and Prevention that the Ebola victim flew part of his itinerary on the airline after leaving Liberia for the United States on Sept. 19. The carrier said it believes the patient flew United from Brussels to Washington's Dulles International Airport on Flight 951 and from Washington to Dallas/Fort Worth on Flight 822 on Sept. 20.
Shares of hotels, airlines and casinos were weak Wednesday due to the weak broad market, but declines were also fanned by the initial worry that viral outbreaks are bad for the travel business.
All but one of the 23 stocks in the Standard & Poor's 1500 hotels, airlines and casinos industry groups closed down Wednesday. These stocks were down by an average of 2.2%, which is worse than the roughly 1.3% decline by the S&P 500.
Among the hardest hit travel stocks was Starwood Hotels & Resorts (HOT), with 1,200 properties. Its shares fell 3.6% to $80.20. Airlines were also hit hard. Shares of SkyWest (SKYW) fell 5% to $7.39. Southwest Airlines (LUV) lost 3.6% to $32.55, JetBlue (JBLU) lost 3.5% to $10.25 and Delta Air Lines (DAL) fell 3.5% to $34.90. United Continental (UAL) fell 2.8% to $45.47.
Some airline analysts advised investors not to panic. "We do not expect this to become a broad-based U.S. airline issue, and think this is an isolated case," said S&P Capital IQ in a research note. "Should flight restrictions become necessary at some point, we think U.S. airlines have limited exposure to the areas of the world where Ebola is an issue."
That's not to say that investors didn't find ways to they think they can profit from the Ebola virus' dispersion.
Shares of biotech companies specializing on rare and difficult-to-treat viral infections were favorites Wednesday.
Investors' favorite way to play Ebola was with Canadian firm Tekmira Pharmaceuticals. (TKMR). Share closed up $3.85, or 18%, to $24.99. The company is working on an Ebola-fighting drug code-named TKM-Ebola that is in trial phase.
Another big gainer on the news was biotech Sarepta Therapeutics (SRPT). Shares rose 78 cents to $21.88. The Cambridge, Mass.-based firm specializes in developing treatments for rare and contagious diseases.
And then there's BioCryst Pharmaceuticals (BCRX). The stock added 37 cents, or 3.8%, to $10.15. The biotech company based in Durham, N.C., develops a range of treatments for infectious diseases, including the flu.
Contributing: Charisse Jones