American Airlines (AAL) stock plunged 5.02% in intraday trading on Tuesday, following a significant downgrade from Jefferies. The investment firm cut its rating on American Airlines from Buy to Hold and dramatically reduced its price target from $20 to $12, citing ongoing concerns about consumer and corporate sentiment in the airline industry.

The downgrade comes as part of a broader reassessment of the airline sector by Jefferies analyst Sheila Kahyaoglu. In addition to American Airlines, Delta Air Lines was also downgraded to Hold, while Southwest Airlines and Air Canada were cut to Underperform. Kahyaoglu warned that summer demand is under pressure due to "swelling macro uncertainty," and expects American Airlines, among others, to cut their full-year 2025 earnings guidance.

This negative outlook for American Airlines and the broader airline industry is further compounded by recent economic data showing plummeting consumer confidence and the impending implementation of new tariffs later this week. The sector has been struggling in recent weeks amid signs of a pullback in travel spending, with major carriers seeing significant stock price declines over the past month. As macro uncertainties persist and the potential for reduced corporate and consumer spending looms, investors appear to be reevaluating their positions in airline stocks, contributing to the sharp decline in American Airlines' share price.