Fed Action Boosts Transport Stocks
The Federal Reserve’s rate cut this week helped transportation industry stocks, as the broader economy needed a boost to help soften the slowdown that is projected to last through the first half of 2008, according to American Trucking Associations’ Chief Economist Bob Costello.
The economy has moderated further in recent months, while truck freight volumes have been softer for much longer than anticipated, including the sluggish start to the 2007 fall freight season, Costello wrote in a memo following the action.
Transportation sector analysts had touted the anticipated rate cut as a way for freight companies — struggling with low volumes and poor demand — to stage a recovery, and following the Fed’s action, share prices of publicly held trucking company freight forwarders rose, the Associated Press reported.
Among trucking stocks that rose following the cut were:
• UPS Inc., ranked No. 1 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers, which rose $1.26 to $75.59 a share;
• YRC Worldwide, ranked No. 4, gained $1.03 to $28.91 a share;
• Con-way Inc., No. 6, rose $1.23 to $49.08; and
• Arkansas Best Corp., No. 16, rose 98 cents to $34.31; and Universal Truckload Services, No. 41, gained 60 cents to $18.47.
Also, freight railroads Union Pacific Corp., Burlington Northern Santa Fe Corp., and Norfolk Southern Corp. all saw their shares rise more than 3% following the rate cut, AP reported.
