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American Airlines Group Inc. (NASDAQ: AAL) stock surged Tuesday as falling crude oil prices lifted airline stocks.
Sentiment also improved after GE Aerospace (NYSE: GE) reported strong third-quarter results, highlighting robust demand for commercial aircraft engine repairs.
The gains came as broader markets advanced. The Nasdaq Composite rose 0.12%, while the S&P 500 gained 0.39%. Market breadth was positive, with 10 of 11 sectors trading higher.
Crude oil prices fell 1% to below $97 per barrel Tuesday, providing relief to airlines facing high fuel costs.
According to Trading Economics, oil prices declined after an unconfirmed report that Qatar and Pakistan had proposed restarting negotiations to end the war with Iran.
Lower crude prices could ease jet fuel expenses, a major operating cost for airlines. This could support profit margins if fuel prices remain lower.
Meanwhile, GE Aerospace reported better-than-expected third-quarter results. The company posted adjusted earnings of $2.25 per share on adjusted revenue of $13.285 billion, beating Wall Street estimates.
The results pointed to strong demand for aircraft engine maintenance and repair services, adding to positive sentiment across the aviation sector.
American Airlines is scheduled to report third-quarter results Thursday, Oct. 22.
Wall Street expects a loss of 36 cents per share, compared with a loss of 17 cents a year earlier. Revenue is projected to rise to $16.21 billion from $13.69 billion.
Investors will likely focus on passenger demand, ticket pricing, operating costs and the company's outlook.
Despite Tuesday's rally, American Airlines remains below its major moving averages.
The stock trades 4.8% below its 20-day simple moving average (SMA), 8.1% below its 50-day SMA, 15.7% below its 100-day SMA and 10.7% below its 200-day SMA.
The 50-day SMA also remains below the 200-day SMA, following a bearish death cross in October.
Meanwhile, the moving average convergence divergence (MACD) indicator remains below its signal line. The negative histogram suggests that momentum remains weak.
Traders are watching $12 as a key support level, while $14 represents potential resistance.
American Airlines carries a consensus Hold rating, with an average price forecast of $17 across 37 analysts. Forecasts range from $11 to $24. Several firms recently lowered their price forecasts:
A sustained move above resistance could strengthen the recovery outlook. However, a break below support could increase selling pressure.
American Airlines shares gained 4.44% to $12.20 at the time of publication Tuesday.
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