The Dow lagged behind the broader U.S. stock market on Monday, as the Department of Transportation zeroed in on Boeing’s flight safety system in the wake of two deadly airline crashes that have sent the company’s share price into a tailspin.
The Dow Jones Industrial Average traded flat Monday, reversing an earlier loss. The index’s movement reflects a tepid pre-market session for Dow futures, which staggered into Monday’s open. At last check, the Dow was up 13 points, or 0.1%, at 25,862.40.
The broad S&P 500 Index of large-cap stocks climbed 0.4% to 2,833.48, where it was inching ever closer to record highs. Seven of 11 primary sectors contributed to the rally, with energy stocks rising 1.2%. Financials and consumer discretionary stocks also rose 1% on average.
Meanwhile, the technology-focused Nasdaq Composite Index climbed 0.5% to 7,725.94.
A measure of implied volatility known as the CBOE VIX bounced off five-month lows on Monday but remained well below the historic mean. VIX climbed 3.1% to 13.28 on a scale of 1-100 where 20-25 represents the long-term average.
Boeing’s share price took another beating Monday amid reports that federal prosecutors are scrutinizing the development of 737 MAX jetliners. As The Wall Street Journal reports, a grand jury in Washington issued a “broad subpoena” to obtain documents and other information related to the development of the fleet. The subpoena was dated March 11, just one day after a Boeing 737 plunged from the sky in Ethiopia, killing 157 people. It was the second deadly crash in five months involving a Boeing 737 MAX plane.
It’s not entirely clear whether the subpoena is related to an earlier inquiry by the Department of Transportation, which was launched in the wake of the Lion Air disaster in October. According to WSJ, Transport officials have warned the Federal Aviation Administration (FAA) to safeguard computer files as it investigates whether the agency used appropriate standards in certifying the 737’s anti-stall system.
Both the FAA and Boeing have confirmed that the fleet was approved to carry passengers as part of the agency’s “standard certification process,” which includes design analyses, maintenance requirements, and flight tests.
“The 737 MAX was certified in accordance with the identical FAA requirements and processes that have governed certification of all previous new airplanes and derivatives,” a Boeing spokesman said, as per WSJ. “The FAA considered the final configuration and operating parameters of MCAS during MAX certification, and concluded that it met all certification and regulatory requirements.”
Dozens of countries around the world have grounded the MAX 737 fleet. Boeing announced last week it was issuing a software update later this month to address the fleet’s safety issues. Astonishingly, investigators of the Ethiopian Airlines crash determined that the plane was configured to dive based on an analysis of the vessel’s jack-screw.
Last modified: September 23, 2020 12:35 PM