Oil sliding on Iran peace hopes, airlines taking off — ride the travel stock rally
Oil prices are falling sharply as investors grow hopeful that a U.S.-Iran peace deal could reopen a critical oil shipping route. Meanwhile, airline and travel stocks like Delta, United, and MGM are surging because cheaper fuel means bigger profits.
Idea
Airlines are some of the biggest beneficiaries when oil prices drop, because jet fuel is their single largest expense. With crude falling 3–5% on renewed hopes for a U.S.-Iran peace deal that would reopen the Strait of Hormuz, Delta, United, and MGM were among the top performers in the entire S&P 500 on Wednesday. Even if a deal takes weeks, the momentum behind these stocks is building — and short sellers are being forced to cover their bets at record levels. The main risk is that peace talks collapse and oil snaps back, so keeping a tight trailing stop is important.