By Nate Wolf
United Airlines Holdings and Delta Air Lines were the top performers in the S&P 500 Tuesday as an unexpected pickup in airfares lifted airline stocks.
Airline fares increased 4% month over month in July, according to the release Tuesday of the consumer price index, marking a sudden reversal after five consecutive monthly declines. It was the largest seasonally adjusted change in airfares since May 2022, according to the Bureau of Labor Statistics, which publishes the data.
The news seemed to boost airline stocks on Tuesday. United was up 9.9%, Delta gained 9.1%, American Airlines Group was climbing 11%, and Southwest Airlines was up 4.1%.
Shares of smaller players such as Alaska Air Group, JetBlue Airways, Allegiant Travel, and Frontier Group Holdings also traded sharply higher.
Investors badly needed this kind of rally. Airline stocks have tumbled this year amid disappointing second-quarter earnings and jitters over consumer demand. Coming into Tuesday, the U.S. Global Jets exchange-traded fund, which holds various airlines, plus travel and aerospace companies, had declined 7.3% in 2025.
The spike in airfares may indicate travel demand has been growing stronger or that airlines have been slashing capacity to find a better balance. In July, Omair Sharif of Inflation Insights projected potential airfare inflation due to capacity cuts and a resulting reduction in discounts, as Barron's reported at the time.
Air travel prices contributed to an acceleration in overall services inflation last month. Services prices rose 0.4% in July, up from a 0.3% gain in June.
This jump "seems to reflect a normalization after a weak period earlier this year rather than a durable pick-up in spending," Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, wrote in a note Tuesday.
Write to Nate Wolf at nate.wolf@barrons.com
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August 12, 2025 12:36 ET (16:36 GMT)
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