“France is at war.” This was the key takeaway from President Francois Hollande’s appearance before a joint session of the country’s parliament following the devastating terror attacks made by ISIS in Paris last Friday. Vowing to fight against the terrorist organization, he requested approval to extend the country’s emergency over the next three months.

Hollande made other comments which called for securing France’s borders. The country’s benchmark CAC 40 index moved lower initially on Monday, before recouping most of the day’s losses. However, French travel, tourism and airline stocks took a significant hit. Soon, the contagion spread to the U.S. with stocks from these sectors suffering losses.  

France’s Tourism, Airline Stocks Fall

Among the major decliners on the CAC 40 were tourism, airline and luxury stocks. Hotel company Accor SA had declined 5.4% at one point. Other travel related companies were also negatively impacted. Shares of Air France-KLM Group (AFLYY - Snapshot Report) declined 5.7% and Aeroports de Paris lost 4.9%.

Owners of luxury brands paid the price as well. Kering SA, which had to close stores of brands like Gucci, lost 1.1%. Shares of LVMH Moet Hennessy Louis Vuitton SE declined 1.2%.

Contagion Spreads to U.S.

Travel and airline companies in the U.S. also took a beating on Monday in the wake of Paris attacks. Shares of online travel related companies declined, with Expedia Inc. (EXPE - Analyst Report) losing 2.1%.

Airline companies such as Southwest Airlines Co. (LUV - Analyst Report) and JetBlue Airways Corp. (JBLU - Analyst Report) dropped 0.3% and 0.7%, respectively. Nevertheless, the broader markets gained as investors bet that the deadly terror attacks in Paris will have little long-term effect on the global financial markets.

Tourism Keystone for France’s Economy

The travel and tourism sector contributes nearly 7.5% of France’s GDP. Roughly 10% of all jobs in the country are generated from this sector. Not surprisingly, Paris has come in third in terms of popularity among tourists. Nearly 16 million visitors travel to Paris and incur $17 billion in expenses each year, according to MasterCard data.

This means that travel and tourism companies will be affected to a great extent due to the loss of business from France. It remains to be seen whether investors view the threat to France as short term or one that is likely to recur in the future.

3 Big Losers

Market watchers have opined that the impact of the incident will be limited to the short term. This is because as the number of such incidents increases, the duration of the impact on the markets declines.Below we present three major companies which incurred heavy losses on the bourses on Monday.

The Priceline Group Inc. (PCLN - Analyst Report) is one of the largest online travel companies in the world. The company’s travel-related offerings cover hotel rooms, airline tickets, rental cars, vacation packages, cruises, “things to do” at customer destinations and travel insurance. The stock holds a Zacks Rank #3 (Hold) and declined 2.4% on Monday.

Delta Air Lines, Inc. (DAL - Analyst Report) is a leading provider of scheduled air transportation for passengers and cargo throughout the U.S., and around the world.

The company has stated that it will continue to run flights to Paris. However, there could be cancellations or significant delays for which it will refund passengers. The stock holds a Zacks Rank #3 (Hold) and lost 2.2% on Monday.

Carnival Corporation (CCL - Analyst Report) operates as a cruise and vacation company. As a single economic entity, Carnival Corporation & Carnival plc is the largest cruise operator in the world. This Zacks Rank #2 (Buy) stock lost 1.5% in tandem with the broader sector decline.