The stock market has moved upward with few breaks in recent weeks, even though COVID-19 cases in the United States have continued to rise. That seemed to be the case again early Monday. However, investors lost value at the end of the session. Although the Dow Jones Industrial Average (DJINDICES: ^ DJI) hanging on small profits, the S&P 500 (SNPINDEX: ^ SPX) It fell sharply from its intraday highs.
Stock market today
|
Index |
Percentage change |
Point change |
|---|---|---|
|
Dow |
+ 0.04% |
+11 |
|
S&P 500 |
(0.94%) |
(30) |
|
Nasdaq compound |
(2.13%) |
(227) |
Data source: Yahoo! Finance.
It would be natural to assume that the same industries that have been hit hardest during the latest bouts of nervousness about the COVID-19 pandemic would lose ground again today. That was the case in many areas, such as cruise stocks and airlines. However, the casino resort space was an amazing bastion of strength. Wynn Resorts (NASDAQ: WYNN) and Las Vegas Sands (NYSE: LVS)In particular, he did extremely well. Let’s take a closer look at what raised gambling stocks on Monday.
Image source: Getty Images.
The rest of the world is trying to keep going.
What investors need to understand about Wynn and Las Vegas Sands is that, despite their presence in the Las Vegas American gaming mecca, the two casino operators do not get most of their revenue and income domestically. Instead, the Asian gaming capital of Macau has become the decisive focal point for the success of Las Vegas Sands and Wynn. This has made both companies extremely sensitive to what is happening in the former Portuguese colony and the current Chinese protectorate.
On Monday, the news from Macao was good. Macao borders the Chinese mainland, and Guangdong province, which is right next to Macao, took a step to ease restrictions related to the coronavirus pandemic. Specifically, Guangdong reduced its quarantine requirement for those seeking to enter Macao, as it does not require a 14-day blockade for potential visitors who had effectively closed the flow of visitors to the Wynn and Sands casino resorts there.
Will Sands and Wynn continue to rise?
Investors were quick to jump on any positive news, and that appeared in stock movements. Wynn’s shares rose nearly 10%, and Las Vegas Sands rose more than 6% on the day.
However, the problem is that even a substantial short-term recovery would still leave Macao’s traffic well below its pre-pandemic levels. In recent months, gaming revenue in Macao as a whole has decreased more than 90% compared to the previous year’s levels.
Furthermore, even if Las Vegas is not a large market for either company, possible events there could affect progress in Macao for the two companies. The number of cases in Nevada has been increasing, and the vast majority of new cases come from Clark County, where Las Vegas is located. However, casinos remain open at least for now, even when local bars have been ordered to close once again in response to the increase in the coronavirus.
Wynn and Sands remain at depressed levels even after today’s jump. In the long term, as long as a permanent solution is discovered for COVID-19, shareholders have reason to expect the shares to regain significant ground they have lost since February. However, until that happens, you can expect volatility to continue.
