(The Associated Press circulated the following on October 2.)
NEW YORK — Railroad shares plummeted Thursday after government reports showed factory orders dropped and jobless claims hit a seven-year high.
In afternoon trading CSX, Union Pacific, Norfolk Southern, Kansas City Southern and Burlington Northern Santa Fe all showed double-digit percentage declines.
Orders for manufactured goods fell by 4 percent in August – the biggest drop since October 2006. The Labor Department said initial unemployment claims rose by 1,000 last week to a seasonally adjusted high of 497,000. Analysts expected claims to fall.
JPMorgan analyst Thomas R. Wadewitz added to investors’ gloom by lowering 2009 earnings estimates for some major railroads and trucking companies, seeing weak demand as the economy deteriorates. He also said rails may do better than other segments of the ground transport sector.
“Due to a combination of their strong market position (limited competition from other modes), support for volumes from the coal and agriculture segments, and moderate productivity opportunities, we expect the rail EPS growth story to show the least sensitivity to economic weakness of the broader transport segments,” Wadewitz said in a note to investors.
The analyst lowered his estimates for Burlington Northern Santa Fe, CSX, Canadian National and Canadian Pacific, while slightly raising estimates for Union Pacific and Norfolk Southern.
Shares of CSX lost $6.45, or 12.2 percent, at $46.60. Union Pacific gave up $8.59, or 12.4 percent, at $60.85. Norfolk Southern fell $8.36, or 12.9 percent, to $56.68. Kansas City Southern dropped by $7.72, or 17.7 percent, to $35.89. Burlington Northern Santa Fe lost by $6.40, or 7.2 percent, to $83.09. Canadian Pacific fell $4.35, or 8.3 percent, at $48.09. Canadian National gave up $3.49, or 7.3 percent, at $44.22.