Boeing share price tumbles, leading the decline on Wall Street
The US aerospace and manufacturing company helped drag the S&P 500 lower on Wednesday, with investors unable to find solace from the prospect of a taxpayer bailout.
Boeing shares tumbled 16% on Wednesday morning after investors were unable to take solace from the prospect of a $60 billion taxpayer bailout to protect it from the collapse in global travel due to the coronavirus outbreak.
‘Ultimately, we think the US government will take the view that Boeing is ‘too big to fail,’ but that could provide little comfort to equity investors,’ Robert Stallard, analyst at Vertical Research Partners said a note.
Stallard did mention, however, that a Boeing bailout is a ‘moral hazard’, with taxpayers likely to take a dim view of such a move after bailing out US banks in the wake of the 2008 financial crisis.
‘This is a company that boasts on its website that it has bought back $35 billion of shares and paid $15 billion in dividends over the last 5 years,’ Stallard added.
‘It has also paid executives egregious amounts of money and been implicated in two fatal air crashes.’
Boeing is trading at $104 a share as of 16:15 (GMT) on Wednesday, down from $330 a share at the start of the year.
Wall Street losses continue amid Covid-19 outbreak
Boeing helped lead Wall Street lower on Wednesday, with the S&P 500, Nasdaq Composite and Dow Jones all down more than 4%.
Despite the Federal Reserve lowering interest rates to near zero to reduce the economic impact of Covid-19 earlier this week, it has done little to stop US equities continuing their decline.
Travel industry suffers as coronavirus spreads
The travel industry is struggling to cope with the impact of the coronavirus, with the S&P 1500 airlines index down 13% on Wednesday.
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