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Wednesday, July 26, 2006

What Are Transports Signaling?

Stock Tickers: NSC, CSX, BNI, UPS, FDX, JBHT, YRCW, BA, RAIL

Today, it was Norfolk Southern (NSC) that hurt the transports. Norfolk Southern (NSC) is down 9% today at $41.17 after its $0.03 miss when it reported EPS at $0.89.

Would transports be lower today if Cramer didn't say that CSX (CSX) was now a Secular stock rather than a cyclical? Yesterday, Burlington Northern (BNI) beat earnings but fell after signaling that Q3 costs would rise 18%. We also saw UPS (UPS) get hit hard on their forecast, in what was actually its worst day ever. UPS is down again today by -4.4% at $68.64. Fedex (FDX) was lower yesterday with UPS, and FDX is down another 2.3% at $106.75. Even truckers J.B.Hunt (JBHT) is down 3.6% at $20.89 and YRC Worlwide (YRCW)is down 3.1% at $41.68.

Boeing (BA) is not a transport service operator, but they are the largest plane maker and are trading down 3.1% at $81.08 after it reported conservative numbers showing a loss for the quarter. Even Freightcar America (RAIL), the rail car manufacturer pure-play stock, is down 0.7% at $48.50.

It may be a stretch to say CSX could save all the transports, but much of this is more of the same. It doesn't look like the street needs to brace for a homebuilder sort of sell-off in the group where the stocks fall every day on bad news and barely show any signs of life on Not-Bad news, but who knows for sure. They are sure acting ugly. With transportation stocks being one of the key leading indicators for the future of the market and the economy it is sure making some think more defensively.

Jon C. Ogg
July 26, 2006
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