Boeing’s Rally Moves the Dow Despite Dreamliner Concerns
Boeing’s (NYSE:BA) 787 Dreamliner has made headlines all week after one caught fire at Logan Airport in Boston on Monday night. After that, a different 787 at the same airport sprung a fuel leak shortly before takeoff, and then issues with the brakes cancelled a Dreamliner flight in Japan.
Unsurprisingly, there are two sides to these issues and a whole lot of grey in between. In one corner are investors who put tremendously heavy selling pressure — four times average volume — on Monday and Tuesday, pulling the stock down 2.01 percent and 2.63 percent, respectively. In the other corner, investors who think that the market failed to check its emotions at the door, jumped on the dip, and bid the price back up over 3 percent on Wednesday.
This price action points to the obvious conclusion that headlines can move stocks, and Boeing’s series of unfortunate events is, at minimum, exactly that. Flight cancellations and delays due to mechanical or electrical problems with airplanes is by no means uncommon. It’s not the existence of these “growing pains” that is at issue, but whether or not their severity will be enough to cause existing and future airline customers to re-think their decisions.