What happened
Cruise stocks fell on Monday after mounting COVID-19 cases forced California government officials to reverse some of the state’s economic reopening plans.
At the close of trading, the shares of Royal Caribbean (NYSE: RCL) and Norwegian Cruise Line Holdings (NASDAQ: NCLH) decreased 4.3% and 4.9%, respectively. The two actions of the carnival Carnival Corporation (NYSE: CCL) and Carnival Plc (NYSE: CUK) they fell 5.5% and 4.8%.
And that
With the new coronavirus infecting alarming numbers of people in his state and across the country, California Governor Gavin Newsom ordered a number of businesses, including restaurants and movie theaters, to shut down indoor operations. He also ordered that all bars in the state be closed.
Cruise stocks fell on Monday as COVID-19 cases increased in the US and worldwide. Image source: Getty Images.
The state order is a troubling escalation of California’s previous attempt to close businesses only at designated COVID-19 hot spots.
Now what
So far, the Trump administration has rejected calls to curb economic reopening plans in light of increasing COVID-19 case counts. However, investors have wondered if state and local officials would delay or even reverse their reopening hours. On Monday they got their response.
California may not be the last state forced to close businesses due to the pandemic. New COVID-19 case counts are at alarming levels in states like Florida and Texas. Officials there could enact stricter social distancing measures to stop the spread of the dangerous disease.
None of this bodes well for the cruise industry, which is desperate to resume navigation operations in the fall. If COVID-19 cases continue to rise and the number of coronavirus-related deaths continues to rise, health officials may extend orders not to sail until 2021. That could be devastating for Carnival, Royal Caribbean and Norwegian Cruise Line, which they are all cash hemorrhages with their ships stagnant in port.
