Travel stocks sink after thousands of flights grounded

Cruise lines stocks also fell sharply, with Royal Caribbean Cruises dropping 3% and Carnival Corp. losing more than 7%.

Norwegian Cruise Line Holdings‘ stock fell 10% after its earnings call disappointed investors. Elliott Investment Management said last month that it had built a more than 10% stake in the company and that it’s seeking changes. New CEO John Chidsey told analysts that “our strategy is sound, our execution and coordination have not been, and a culture of accountability is essential and necessary going forward.”

Oil prices also rose, potentially driving up airlines’ biggest cost after labor. Flights through the Middle East were grounded, including to destinations like Tel Aviv and Dubai.

United Airlineswhich has the most international exposure of the U.S. carriers, fell nearly 3%. Service to Tel Aviv, Israel, one of the airline’s most profitable routes, was halted, but airlines were also was forced to pause flights to Dubai, in the United Arab Emirates, one of the busiest airport hubs in the world. Dubai is also a home base for the airline Emirates.

Shares of American Airlines lost 4% while Delta Air Lines fell 2%.

More than 11,000 Middle East flights have been canceled since the U.S.-Israeli strikes this weekend, according to aviation-data firm Cirium.

International travel has been a bright spot in the travel sector. In January, international air travel demand jumped 5.9% from a year ago while domestic flight demand was nearly flat, the International Air Transport Association, an airline industry group, said in a report Monday.

— CNBC’s Contessa Brewer contributed to this report.