Jefferies turned cautious on the airline sector on Tuesday. The firm warned that consumer sentiment continues to disappoint and pointed out that tariffs, which take effect this week, could impact continue to impact investor confidence. Analyst Sheila Kahyaoglu also expects corporate spending will be lower for the balance of the year.

The firm downgraded American Airlines and Delta Air Lines to Hold ratings after having them set at Buy. Meanwhile, Air Canada and Southwest Airlines were lowered to Underperform from Hold. Specifically, Kahyaoglu warned that American, Air Canada, and Southwest Airlines will cut their 2025 guidance.

The rating moves left United Airlines as the only Buy-rated airline stock at the firm.

Delta Air Lines and United Airlines fell 5%; JetBlue and American Airlines fell 4%; Alaska Air and Southwest Airlines fell 3%; Boeing fell 2%.

Notably, the U.S. Global Jets ETF (NYSEARCA:JETS) is down 18% on a year-to-date basis. As one of the sectors most vulnerable to economic shocks, airlines have been struggling over the past several weeks as investors digest soft economic data. The recent flurry of news includes bad news on consumer spending, an uptick in a key inflation indicator, and a downward revision to the University of Michigan’s consumer sentiment index reflecting American’s heightened worries about the "potential for pain amid ongoing economic policy developments."