Travel Stocks, Home Builders, Fear Gauge: 3 Things to Watch

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Investing.com — The Federal Reserve held rates steady as expected and said it was in no rush to raise them, and naturally that propelled both the Dow and the S&P 500 to all-time highs on Wednesday.

As the $1.9 trillion stimulus started to hit individual bank accounts on Wednesday, the central bank again brushed off concerns about rising inflation.

The economic reopening continues to lift shares of everything from home builders to live entertainment operators such as Walt Disney Company (NYSE:DIS), which will open its Disneyland theme park in Southern California next month.

The weekly jobless report on Thursday, which comes out at 8:30 AM ET (1230 GMT) will provide investors another reading on the health of the economic recovery. 

Here are three things that could affect markets tomorrow:

1. Travel stocks measure of the success of the recovery

Cruise operators are awaiting word when they can begin to set said again as more older Americans show interest in travel now that many have received their vaccines. Carnival (NYSE:CUK) Corporation (NYSE:CCL) is up 121% in the last year in anticipation of an eventual return to the seas. Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) is up 204%.

As cruise operators see improved outlook for demand, airplane stocks will also likely benefit from upcoming spring holiday travel. American Airlines Group (NASDAQ:AAL) is up 61% in the last year, while United Airlines Holdings Inc (NASDAQ:UAL) hit a new 52-week high on Wednesday.

2. Homebuilders set to gain from stimulus

Lennar Corporation (NYSE:LEN)set the tone for other home builders on Wednesday, rising 13% to a 52-week high. That came after it reported revenue that topped expectations.

Lennar announced earnings per share of $3.20 on revenue of $5.33 billion. Analysts polled by Investing.com anticipated EPS of $1.71 on revenue of $5.12 billion.

Other home builders responded. PulteGroup Inc (NYSE:PHM) jumped 4%, as did Toll Brothers Inc (NYSE:TOL).

3. How high can the Dow go?

The Dow Jones Industrial Average pierced through 33,000 to close at yet another record high on Wednesday, pumped by the Fed’s promise not to raise rates any time soon. It only hit the 32,000 milestone five trading days ago.

At the same time the CBOE Volatility Index, aka, Wall Street’s “fear gauge” has come down, dropping another 2.8% on Wednesday to below 20. That is the lowest since last March. Low volatility, such as was seen during the pre-Covid market, is considered a bullish sign for stocks.