The share of commercial aerospace giants’ Boeing shares rose 5% on Monday afternoon, adding 57 points to the Dow Jones Industrial Average’s gain of 330 points, making it the largest single contributor to the Dow index.
The reason for this is Boeing’s stock (ticker: BA) is of course Covid-related. The virus has dominated the trade in commercial aerospace for months.
The number of new Covid-19 cases diagnosed daily in America is trending lower. This is the first bit of good news for the aerospace sector.
The second Monday’s data point comes from the TSA. More than 830,000 passengers boarded commercial jets on Sunday. It has dropped from more than 2.6 million on the same day a year ago, but it is also the highest number of passengers passing through TSA checkpoints at US airports since Covid-19 reduced demand for commercial air travel.
To track Boeing’s profits, US airlines rose by an average of about 5.6%. Boeing peer Airbus (AIR.France) increased by 4% abroad. Aerospace supplier stockBarron’s tracks were up about 4% on average.
Covid-19 is the biggest issue the industry is facing, frankly, ever. For Boeing, Covid remains a bigger deal for its shares than even the 737 MAX, which has been grounded worldwide since mid-March 2019 after two fatal crashes within five months.
Boeing, before the second MAX crash, had a market capitalization of about $ 240 billion. The market value today is about $ 100 billion, well below the average Dow Index market value of about $ 294 billion.
Boeing can still have a big impact on the index because the Dow is price-weighted. So, for example, Boeing may be worth a total of 1/20 of what Apple (AAPL) is valued at in the market, but Boeing’s share price of $ 179 gives it 40% of the effect of Apple’s share price in Dow Industrials. Apple shares are trading at around $ 450.
The Dow rose 1.1% on Monday, while the S&P 500 was 0.2% higher. S&P is weighted by market value. Apple is the largest weight in the S&P 500 and accounts for about 7% of that market index.
Write to Al Root at [email protected]