What Happened?

A number of stocks fell in the morning session after oil prices soared as President Trump declared the Iran ceasefire "over" and threatened more strikes. 

Jet fuel is a critical expense line for airlines, so no operating group is more directly exposed to a crude spike. With WTI up 7.1% to $75.41, every dollar of higher fuel flows straight into cost per available seat mile, and hedging only softens the blow. The damage runs beyond costs: renewed Middle East hostilities raise the risk of airspace closures and rerouting on international networks, while a nervous consumer may defer discretionary trips just as fares would need to rise to offset fuel.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Consumer Discretionary - Travel and Vacation Providers company American Airlines (NASDAQ: AAL) fell 5.3%. Is now the time to buy American Airlines? Access our full analysis report here, it’s free.
• Consumer Discretionary - Travel and Vacation Providers company United Airlines (NASDAQ: UAL) fell 3.9%. Is now the time to buy United Airlines? Access our full analysis report here, it’s free.

Zooming In On American Airlines (AAL)

American Airlines’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 14 days ago when the stock gained 7.1% on the news that U.S. West Texas Intermediate (WTI) crude futures fell below $70 per barrel for the first time since early March. 

Oil prices continued a steep decline, with WTI dropping 3% to $69.84 and Brent crude falling to $74. This marked the lowest level since before the Middle East conflict escalated in late February. Jet fuel is the second-largest operating expense for airlines, often accounting for 20-30% of total costs. 

A sustained 3% drop in crude directly expands operating margins, provided passenger demand remains stable. Furthermore, the drop in oil prices acts as a catalyst for the broader travel sector, as lower fuel costs give airlines flexibility to stimulate demand through pricing without sacrificing profitability. However, risks remain if the drop in oil reflects a broader macroeconomic slowdown rather than just easing geopolitical tensions.

American Airlines is up 5.7% since the beginning of the year, and at $16.36 per share, it is trading close to its 52-week high of $17.20 from July 2026. Despite the year-to-date gain, investors who bought $1,000 worth of American Airlines’s shares 5 years ago would now be looking at only $804.08.

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