American Airlines stock plummeted 5.06% during intraday trading on Thursday, reflecting significant selling pressure on the carrier.

The decline followed a downgrade by Rothschild & Co Redburn, which cut its rating on American Airlines to Neutral from Buy and slashed its price target to $12.50 from $17. The downgrade reflects concerns about domestic airline capacity growth and a less bullish outlook on the stock's near-term prospects.

Furthermore, the broader U.S. airline sector faced headwinds from a sharp spike in oil prices, which rose more than 3% as geopolitical tensions escalated in the U.S.-Israeli conflict with Iran. Higher fuel costs are a major expense for airlines and typically pressure their profitability and stock prices.