The stock market was volatile on Tuesday after posting solid gains to start the week. The Dow Jones Industrial Average (DJINDICES: ^DJI) was up 0.37% at 1:10 p.m. EDT today, outperforming the other major indexes.
One thing keeping the stock market in check could be comments from Federal Reserve chairman Jerome Powell, who warned on Tuesday that too little government aid would lead to a weak economic recovery. Congress has yet to agree on additional stimulus measures, and an agreement does not appear close.
Shares of Boeing (NYSE: BA) were moving in the wrong direction on Tuesday after the airplane manufacturer predicted a difficult decade ahead. Meanwhile, the stock of Walmart (NYSE: WMT) was little changed after the retailer announced an insurance brokerage business.
Boeing forecasts tough years ahead
The coronavirus pandemic has greatly reduced demand for air travel. While the number of daily air passengers in the United States has improved since bottoming out in April, the Transportation Security Administration is still reporting year-over-year declines around 65%.
This lack of demand for air travel will have longer-term implications for the aviation industry. In its 2020 market outlook, Boeing predicted demand for 18,350 commercial airplanes over the next decade, down 11% from the comparable 2019 forecast.
While the next decade will be tough, Boeing is more optimistic when a 20-year period is considered. The company expects demand for 43,000 commercial airplanes over the next 20 years, which will drive the size of the global commercial fleet from 25,900 today to 48,400 by 2039. Passenger traffic is expected to grow by an average of 4% annually over the next two decades.
Boeing expects single-aisle airplanes to be the largest market segment, predicting 20-year demand of 32,270 planes. This category includes its 737 MAX, which is still grounded following two fatal crashes. The company sees single-aisle demand recovering more quickly than the industry as a whole due to the role these planes play in short-haul routes.
The market for wide-body planes will recover more slowly, according to Boeing’s forecast, due in part to uncertainty surrounding international travel. Air cargo demand, expected to grow by 4% annually over the next 20 years, will drive demand for wide-body freighter planes.
The market didn’t like Boeing’s forecast, sending the stock down about 2.6% by early Tuesday afternoon. Shares have lost nearly 50% of their value so far this year.
Walmart rolls out insurance services
Mega-retailer Walmart today announced Walmart Insurance Services, a licensed insurance brokerage. The plan is to assist people with enrolling in Medicare insurance plans, which it calls a “cumbersome, confusing process.”
Walmart Insurance Services will begin selling Medicare insurance plans from a variety of health insurance providers during this year’s enrollment period, which runs from Oct. 15 to Dec. 7. Over time, the company expects to add more providers.
In the announcement, David Sullivan, the program’s general manager, said: “[W]e want to be a trusted partner on their healthcare journey. Helping customers select the right Medicare insurance plan to meet their needs aligns with Walmart’s mission of helping people save money and live better.”
Walmart stock failed to get a boost from the move, and was roughly unchanged by early Tuesday afternoon. Shares of Walmart have gained close to 20% this year.
Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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