How Major US Rail Stocks Behaved following Trump’s Victory



Trump’s victory

The market showed a mixed reaction to Donald Trump’s emerging as a clear winner in the 2016 US presidential election. In this short series, we’ll focus on how major US rail stocks have reacted to Trump’s triumph.

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Share price reactions

Norfolk Southern (NSC) and CSX Corporation (CSX) run a near duopoly in the eastern United States. On November 9, 2016, CSX and NSC rose 5.6% and ~3%, respectively, to close at $33.8 and $98.8 per share.US-Mexican commerce on rail Kansas City Southern fell 11% on the day to settle at $82.5 per share.

Canadian rail companies Canadian National Railway (CNI) and Canadian Pacific Railway (CP) fell ~1% and 0.05%, respectively, on November 9, 2016. Western US major rail carrier Union Pacific (UNP) rose 3.7% to close at $93.9 per share on the day. Reacting to Trump’s triumph, the largest US short-line operator, Genesee & Wyoming (GWR), rose 6.6% on the day.

The above graph exhibits that since 2Q16, major US rail stocks have been providing almost flat returns to investors. A weak global economic environment, a strong US dollar, and slow recovery in US markets have driven the dwindling freight volumes of these railroad companies.

ETF investment

Investors opting for exposure to transportation and logistics stocks can invest in the Industrial Select Sector SPDR ETF (XLI). This ETF invests ~9% in major US road and rail companies and 5.6% in airlines.

For more information on major US railroad stocks, visit Market Realist’s Railroads page.


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