Boeing clears key hurdle and stock rallies to lead the Dow

By Claudia Assis

Smallest member of the 737 Max family is cleared by FAA

Boeing's stock led Dow gainers on Monday.

Shares of Boeing on Monday rallied 8% to lead the Dow's gainers after the aerospace and defense company cleared an important regulatory hurdle.

The Federal Aviation Administration cleared for commercial service the smallest of Boeing's (BA) 737 Max planes, the 737 Max 7, the company said Monday.

That review had been going on for nearly a decade, and Wall Street took the clearing as one more sign that Boeing's turnaround continues apace.

It also bodes well for the eventual certification of Boeing's 737 Max 10. That aircraft completed final tests last month.

Boeing's stock ended at its highest in nearly a month and notched its largest one-day percentage increase since Dec. 2, when it rose 10%. In addition to being the best performer in the Dow Jones Industrial Average DJIA, it was also the ninth best performer in the S&P 500 index. SPX

The FAA clearance "validates the rigor of our airplane's design and recognizes the determination and resilience of our 737 MAX development team," Boeing said in a statement.

The 737 Max 7 is the smallest and longest-range member of the 737 Max family, offering 135 to 160 seats and providing about 10% more range potential than its siblings, the company said.

That's a sweet spot for airlines, as the plane would be flexible enough to be used in a variety of domestic and short-haul international flights.

There are 282 Max 7 orders as of the end of June, representing 6% of the total 737 Max backlog of 4,846 aircraft, analysts at Jefferies said.

Southwest Airlines (LUV) is in line to be the 737-7 launch customer. Shares of Southwest rose nearly 5% on Monday, amid bigger gains for some of its U.S. rivals and a 4% advance for the U.S. Global Jets ETF. JETS

Don't miss: Loyalists may miss the old Southwest. Wall Street loves the new one.

Also helping Boeing's stock, analysts at BNP Paribas earlier Monday upgraded their rating on Boeing shares to the equivalent of buy, saying that one of the tailwinds for the company would be the certification of both the Max 7 and Max 10.

The certifications "will drive inventory liquidation and operational stability," the analysts said.

-Claudia Assis

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08-03-26 1617ET