(The Associated Press circulated the following article on June 8.)
NEW YORK — Shares of rail companies were down Thursday afternoon as investors expressed worries over an economic slowdown and took profits.
Shares of Burlington Northern Santa Fe Corp., the nation’s No. 2 railroad, fell 97 cents to $73.24 on the New York Stock Exchange. The stock is off 17 percent since reaching a 52-week high of $87.99 on April 19.
Shares of the nation’s largest rail company, Union Pacific Corp., were off 21 cents to $86.96 in afternoon trading on the NYSE. The stock has shed 11 percent since reaching a 52-week high of $97.49 on April 24.
Shares of other major rail companies like Canadian Pacific Railway Ltd., CSX Corp., Canadian National Railway Co., and Norfolk Southern Corp. were also down.
David Kratochvil, an analyst with Rochdale Research in New York, downgraded Burlington Northern to “Hold” from “Buy” Wednesday morning. He said the stock will face continued pressure from rising inflation concerns and growing expectations for continued tightening of short-term interest rates. Should an economic slowdown occur, reduced demand for consumer items like Asian electronics, as well as manufacturing supplies, could negatively affect Burlington Northern’s intermodal business.
Intermodal, which involves handling freight between different forms of transport, accounts for 35 percent of Burlington Northern’s business. The company is hoping to expand that to 45 percent by 2010, he said.
“But all industrials are getting hammered today,” Kratochvil said. “People are fearing a slowdown and investors are taking profits, especially in the rail companies, which have been doing well.”