Hotel And Casino Stock Investors Cheer Powell's Rate Cut Signal, Buoying Hopes Of Expansion Plans

Hotel and casino stocks jumped on Friday, following Federal Reserve Chair Jerome Powell's comments indicating a potential interest rate cut next month.

Investors piled into these real-estate heavy companies, optimistic that potential rate cuts would supercharge their expansion plans. Lower interest rates make borrowing cheaper, allowing hotels to finance and construct new properties more easily.

Shares of leading operators Hilton, Marriott, and Hyatt rose 3% to 5.3% on Friday. Shares of casino and resort companies MGM Resorts, Wynn Resorts, and Caesar's Entertainment gained 3% to 7%.

On Stocktwits, the retail sentiment was 'bullish' for MGM and Caesar's, 'neutral' for Marriott, Hyatt, and Wynn Resorts, and 'bearish' for Hilton as of late Sunday.

Top U.S. hotel chains have opened or announced plans to open new properties in Asia and Africa. MGM is exploring a mega-resort development in Dubai nicknamed "The Island," while Wynn is building its $3.9-billion Ras Al Khaimah resort and casino, which would be the first land-based casino in the UAE when it opens in 2027. Meanwhile, Ceaser's is renovating its properties in the U.S. and Singapore.

Hotel stocks, in particular, have rebounded in recent months, driven by a recovery in global travel, leading to upgrades by analysts. The trends are driven by Asia, while the U.S. market continues to be weak.

Still, AdvisorShares Hotel ETF (BEDZ) and ETF Series Solutions Trust - Defiance Hotel, Airline, and Cruise ETF (CRUZ), funds that travel hotel and travel stocks, are down 12% and 16.7%, respectively, year-to-date, compared to the 9.5% rise in SPDR S&P 500 ETF Trust (SPY).

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