In morning trade, the airline operator's shares are down 10.5% to $8.72.

Why is the Qantas share price descending rapidly?

There are a few reasons why the Flying Kangaroo's shares are falling heavily this morning.

The first is a broad market weakness which is weighing down most ASX 200 shares on Tuesday. This has been caused by a selloff on Wall Street overnight due to US recession concerns.

In addition, a number of airline stocks tumbled sharply lower overnight in the United States such as American Airlines Group Inc (NASDAQ: AAL), Southwest Airlines Co (NYSE: LUV), Delta Air Lines Inc (NYSE: DAL), and United Airlines Holdings Inc (NASDAQ: UAL).

American Airlines was down 4% during the session and then a further 7.7% in after hours trade, whereas Delta Air Lines dropped 5.5% during the session and then continued to fall 11% after hours. It was a similar story for the other airline stocks.

This came after Delta Air Lines revised its guidance due to a decrease in consumer and corporate confidence, leading to weaker domestic demand amid heightened macroeconomic uncertainty.

What else?

Also weighing down the Qantas share price today is the fact that it is trading ex-dividend for its first payout since 2019.

When a share goes ex-dividend, it means that the rights to the dividend are settled and new buyers will not receive the payout when pay day comes around.

As a result, a share will usually drop to reflect this. After all, you don't want to pay for something you won't receive.

Qantas dividend

Last month, Qantas released its half year results and reported an 11% increase in underlying profit before tax to $1.39 billion.

This allowed the company to declare a $250 million base dividend and a $150 million special dividend. Both are fully franked and total 26.4 cents per share.

Based on where the Qantas share price ended yesterday's session, this equates to a 2.7% fully franked dividend yield. Not bad for just the interim payout.

Eligible shareholders can now look forward to receiving a pay check from Qantas next month. It is scheduled to pay the dividend on 16 April.

After which, according to a note out of Goldman Sachs, its analysts are forecasting a fully franked 16.6 cents per share final dividend in August.

Goldman currently has a buy rating and $11.80 price target on Qantas' shares.

The post Why is the Qantas share price crashing 10% today? appeared first on The Motley Fool Australia.

The ASX IVV delivered total returns (including dividends) of 37.34%, according to preliminary numbers yet to be confirmed by ETF provider iShares.

The IVV ETF closed the year at $63.24 per unit on 31 December. It hit a record high of $64.79 per unit on 27 December.

The ASX IVV seeks to track the performance of the S&P 500 Index (SP: INX), which represents the 500 largest US stocks, before fees.

According to the S&P Global website, the S&P 500 rose by 23.31% to close at 5,881.63 points on 31 December. If we add dividends, the S&P 500's total gross return for the year was 25.02%.

(The disparity between the growth rate of the S&P 500 and the ASX IVV is due to the currency exchange. In AUD terms, S&P Global reports that the S&P 500 rose by 35.9%, with total gross returns of 37.78%.)

The S&P 500 significantly outperformed the benchmark S&P/ASX 200 Index (ASX: XJO), reminding us of the importance of geographical diversification in our investment portfolios.

The ASX 200 delivered a healthy but vastly inferior total gross return of 11.44%.

US shares grew strongly due to investor enthusiasm, excitement over artificial intelligence (AI), a resilient economy, Donald Trump's US presidential election, interest rate cuts in the second half of 2024, and other factors.

JP Morgan Global Market Strategist Ian Hui said the Magnificent Seven also powered the S&P 500's rise due to the companies' projected earnings growth of 36.2% vs. 3.1% for the balance of the index.

The Magnificent Seven US shares are Meta Platforms, Amazon, Apple, Alphabet, Nvidia, Microsoft and Tesla.

Australian investors were certainly mindful of the runaway US market in 2024. Vanguard reported much larger inflows into exchange-traded funds holding international shares (mostly US shares) last year.

Stake market analyst Samy Sriram said the iShares Core S&P 500 AUD ETF was the most popular equity purchased via the online trading platform last year. (Check out the 10 most bought US shares here).

Which stocks in the iShares S&P 500 AUD ETF rose most in 2024?

According to Market Watch, these were the 10 best-performing US stocks within the ASX IVV in 2024.

Can US shares keep going like this in 2025?

Top broker Goldman Sachs forecasts the S&P 500 to return 10% in 2025. Goldman's research team predicts the S&P 500 will rise to 6,500 points by the end of 2025.

David Kostin, Goldman's chief US equity strategist, expects the S&P 500 will have a third consecutive year of gains amid strong economic expansion and earnings growth of 11% in the new year.

JP Morgan's Hui says there are early signs that investors are starting to move away from the Magnificent Seven due to their high valuations and still rising but slowing earnings growth rates.

The post Star-spangled returns: iShares S&P 500 AUD ETF soars 35% in 2024 appeared first on The Motley Fool Australia.

Flight Centre shares are sliding 2.74% and are currently fetching $14.21. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 1.07% at the time of writing.

Let's take a look at what might be weighing on the Flight Centre share price.

Travel chaos continues

Flight Centre is not the only ASX 200 travel share struggling today. The Qantas Airways Limited (ASX: QAN) share price is down 2.47%, while Webjet Limited (ASX: WEB) shares are falling 1.84%.

Australian airline shares are following in the footsteps of United States travel shares. United Airlines Holdings Inc (NASDAQ: UAL) shares dropped 2.38%, while Delta Air Lines Inc (NYSE: DAL) shares fell 2.77% and Southwest Airlines Co (NYSE: LUV) tumbled 5.16%.

There was flight cancellation chaos amid blizzards and winter storms. Southwest Airlines cancelled nearly 10,000 flights across the country in three days, Business Traveler USA reported.

Flight Centre has operations and offices globally, including in the United States.

The USA also announced overnight they will require negative COVID tests for travellers from China, including Hong Kong and Macau, The New York Times reported. Japan and Italy have also announced similar measures.

A decision on introducing a similar measure in Australia for travellers from China has yet to be made. Health Minister Mark Butler, in quotes cited by news.com.au, said:

The Australian government continues to monitor the global situation. Travel arrangements for Australians and visitors to the country remain unchanged.

Flight Centre is predicting continued momentum company-wide in FY23. In November, the company reported its cost margin is improving and tracking at 10% in the year to date. This is in line with the company's pre-COVID transformation target. The company is predicting more rapid improvement during the second half of the financial year.

Share price snapshot

The Flight Centre share price has descended 20.35% in the last year.

For perspective, the ASX 200 has shed 6.65% in the last year.

The post Why is the Flight Centre share price in the red today? appeared first on The Motley Fool Australia.

The stock market has been under pressure for months, but Tuesday brought some respite for hard-hit investors. The Nasdaq Composite (NASDAQINDEX: ^IXIC) rose nearly 2% as of 11 a.m. ET, and while it remains far below its all-time highs, some encouraging signs seemed to turn market sentiment back in a positive direction.

Airline stocks did particularly well, with major companies like American Airlines Group (NASDAQ: AAL) and United Airlines Holdings (NASDAQ: UAL) climbing 10% or more Tuesday morning. Airlines across the industry announced some favorable numbers and outlooks that made shareholders feel more comfortable about the prospects for travel in the near future. 

American faces a less bad future

American Airlines provided updated financial and operational guidance for the first quarter of 2022. Its figures presented a mixed picture that nevertheless gave investors more confidence.

On the positive side, some elements of American Airlines' operations won't be as bad as initially feared. The company now believes its first-quarter revenue will drop 17% from where it was three years ago, before the beginning of the COVID-19 pandemic. That leaves plenty of room before American has made a full recovery, but it's better than the 20% to 22% drop that the airline had previously anticipated. 

However, some other aspects were more troubling. Rising crude oil prices have pushed the company's expectations for first-quarter jet fuel costs up sharply to between $2.73 and $2.78 per gallon. That increase, along with lower-than-expected capacity, should push cost per available seat mile up 11% to 13%, higher than its previous estimates for an 8% to 10% rise. With no hedging arrangements in place currently, costs for the remainder of the year are subject to significant volatility.

United sings a similar song

United similarly released its financial outlook update, which also included some numbers for the full 2022  year. Overall, the airline tried to point to encouraging travel demand as COVID-19 case counts have fallen in the U.S., but its numbers weren't as strong as American's in relation to its past guidance.

On one hand, United does expect to see slightly better revenue performance in the first quarter than it previously thought. The airline sees operating revenue at the upper end of its previous guidance for a 20% to 25% drop in comparison to pre-pandemic levels in the first quarter of 2019. United also sees positive adjusted pre-tax income for the second quarter of 2022.

However, additional flight cancellations due to geopolitical conditions have United expecting capacity for the quarter to fall 19%, worse than the 16% to 18% guidance it previously gave. Costs will rise about 18% from three years ago, with fuel prices expected to average $2.99 per gallon in the first quarter and $3.50 per gallon for the second quarter. All of those factors will likely combine to send full-year capacity figures down high single-digit percentages in 2022 compared to 2019, in United's view.

Flying higher?

Some other airline stocks saw similar patterns. JetBlue Airways (NASDAQ: JBLU) now sees revenue being down just 6% to 9% from 2019 levels, better than its previous 11% to 16% estimate. Delta Air Lines (NYSE: DAL) sees revenue recovering to down 22% from its pre-pandemic levels, improving from past guidance for a 24% to 28% reduction. And Southwest Airlines (NYSE: LUV) now sees revenue down just 8% to 10%, better than its initial 10% to 15% projection.

There's still considerable uncertainty, especially given the rise of another omicron subvariant that could be more transmissible and cause more dramatic health effects. Yet investors appear to be tired of the pessimism surrounding the airline industry. At least for today, airline shareholders are looking at the potential bright side after years of tough times. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post These 2 hard-hit Nasdaq stocks flew 10% higher Tuesday appeared first on The Motley Fool Australia.

Monday brought continued uncertainty to Wall Street, and major market benchmarks fell sharply as investors tried to figure out what the future might bring. Between soaring consumer prices, the prospect for rising interest rates, and energy markets facing another round of disruptions, market participants haven't had a clear course to follow. By 12:45 p.m. ET, that sent the Dow Jones Industrial Average (DJINDICES: ^DJI) down 667 points to 32,948. The S&P 500 (SNPINDEX: ^GSPC) fell 95 points to 4,234, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) dropped 282 points to 13,031.

It was nearly two years ago that Warren Buffett faced harsh criticism for choosing to sell out of airline stocks at the beginning of the COVID-19 pandemic. The removal of United Airlines Holdings (NASDAQ: UAL), Southwest Airlines (NYSE: LUV), Delta Air Lines (NYSE: DAL), and American Airlines Group (NASDAQ: AAL) from the list of holdings at Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) struck many as being akin to panic selling, especially when airline shares moved sharply higher soon thereafter. Now, though, airlines are still struggling, and their path forward is far from certain. 

The fall, rise, and fall of airline stocks

Before the pandemic began, investors were generally well disposed to airline stocks. An impressive run of profitable years had suggested that the industry had finally found a business model that would work.

The pandemic put a stop to that optimism. Shares of airline stocks plunged 50% to 60% or more from the beginning of 2020 over the course of three months. Most airlines used bailouts to help them survive financially.

But the development and distribution of effective vaccines seemed to put an end point on the trouble for airlines. By spring of 2021, Southwest shares were back above pre-pandemic levels, while other major airlines had trimmed their losses substantially.

Now, though, airlines appear to be back in dire straits. United is down more than 60% from where it started 2020, while American has fallen by more than half. Delta and Southwest are down about 45% and 30%, respectively. Today alone, the four stocks are down between 7% and 11%.

New challenges in the skies

Problems are lining up for airlines in new and troubling combinations:

• Traffic volumes had only begun to get back to pre-pandemic levels, as pent-up demand for travel largely overcame lingering worries about new COVID-19 variants. Prospects for broader global reopening had looked better. Yet with geopolitical risks having entered the picture, those favorable trends might well reverse themselves.
• One thing that had kept airlines as healthy as they were at the beginning of the pandemic was that energy prices fell to levels not seen in decades. In two years, energy prices returned to more normal levels. Now, the possibility of oil market disruptions related to Russia and its attack on Ukraine have sent oil prices to their highest levels in more than a decade. With jet fuel being a major cost for airlines, the news wasn't welcome.

Buffett's sale hinged on the idea that the industry might never look the same as it did before the pandemic. With new communication methods making in-person travel less vital, even a partial reduction in demand would require a dramatic response from airlines. Indeed, with much weaker balance sheets for many airlines and the prospects of renewed bailout support seeming dimmer, Buffett's concerns might well turn out to have been correct.

Know your thesis

Buffett thinks long term, and it's always premature to judge long-term decisions based on how stocks move in a month, quarter, or even year. Airlines might well turn out OK from here, but it's clear that they've faced many of the ongoing uncertainties that prompted Buffett to seek greener pastures elsewhere. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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