Thank Boeing for the Dow's Latest Rise
June 19 2019 - 11:57AM
Dow Jones News
By Akane Otani
The Dow Jones Industrial Average is within striking distance of
a record, thanks to a stock that had been one of its biggest
laggards earlier this year: Boeing Co.
After rallying to start the week, the blue-chip average is less
than 2% away from topping its October closing high, set aloft by
shares of the jet maker.
Boeing shares tumbled in May as investors weighed further
scrutiny over the safety of the company's 737 MAX, but have
unexpectedly risen 8.8% this week. That puts Boeing on track for
its biggest one-week gain since November and makes it by far the
biggest contributor to the Dow industrials' gains this week.
What is behind Boeing's comeback? Much of the gains came Tuesday
after British Airways parent International Consolidated Airlines
Group SA said it had signed a letter expressing its intent to buy
up to 200 Boeing 737 MAX planes. That marked the first such deal
for Boeing since its 737 MAX 8 was grounded following fatal crashes
in October and March.
Boeing has also gotten a vote of confidence from other airline
operators, albeit for its other planes. Qatar Airways said
Wednesday it had signed an order to purchase five 777 freighters
worth $1.8 billion from Boeing, while China Airlines said it
intended to order up to six of the freighters in an effort to
modernize its fleet.
Of course, the danger of an index rally driven heavily by one
stock is that it can just as easily reverse course. Boeing
continues to face fallout over its 737 MAX planes. Efforts to get
them back into the air have been delayed in part because officials
are weighing whether the average pilot is physically strong enough
to turn a manual crank that would help change the angle of the
plane's nose in emergencies, The Wall Street Journal reported.
Shares initially fell Wednesday after American Airlines
announced a new order for rival plane maker Airbus' A321XLR.
Some passengers remain skittish, too. One in four U.S. fliers
say they would try to avoid flying on a 737 MAX, according to a
Wall Street Journal/NBC News poll.
Yet for now, investors are betting the stock will keep
ascending.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
June 19, 2019 11:42 ET (15:42 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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