Wall Street is optimistic on the opening day of the fourth quarter since the terrible third quarter, mainly September, is now in the past. Boeing (NYSE:BA) stock, which has lagged the market in recent months, surged more than 5% on Monday, a day when investors are looking for possible bargains.
What’s the Reason?
After the S&P 500 dropped by more than 9%, investors appeared relieved when October rolled around. Stocks may become oversold as selling pressure increases. The uptick on Monday looks like buyers are seeking to buy cheaply after the market correction.
They are also responding to reports that a contentious tax proposal in the United Kingdom, which some economists said would cause a recession, was being revised.
Boeing’s stock price has taken an especially severe beating in recent weeks. There has not yet been a significant unexpected unfavorable news to account for the stock’s 20% value decline since the start of August. Even further evidence that demand is stable is that Boeing announced many additional aircraft orders throughout the time.
Boeing’s stock price drop may have been driven more by emotions than underlying factors. Companies like this one fare best when the economy is booming, and airlines have plenty of cash because of the rising demand for air travel. Both airlines and significant vendors like Boeing have felt the effects of the potential for a Federal Reserve-induced economic downturn.
Thus, it should be no surprise that Boeing (NYSE:BA) would be the market leader when the market is more cautious today optimistic view of the situation.
Long-term investors have it rough right now. There is a compelling bull argument for Boeing stock if one looks at the company over many years rather than quarterly. Boeing (NYSE:BA) is a partner in a worldwide duopoly in a market projected to expand by 4% per year over the next two decades. It has booked orders for over 4,000 airplanes, which will generate billions of dollars in revenue in the future.
But there is a lot of uncertainty in the short future. In challenging economic times, airlines may frequently delay orders. Boeing’s (NYSE:BA) debt increased by more than 400% during the pandemic. The firm urgently needs the cash from fresh deliveries to restore its financial sheet and resume regular operations.
All these factors contribute to a stock’s sensitivity to market sentiment rather than fundamental analysis. The most significant piece of advice I can give Boeing stock shareholders is to strap on and be ready for the ride of their lives.
On Monday, investors are taking a closer look at the sell-off and getting some good news about the global economy, which is helping Boeing stock.
Featured Image – Unsplash © Jacob Mathers