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TRANSPORT STOCKS DRIVING FOR ROUGHEST RIDE SINCE SEPT

The Dow Jones Transport Average .DJT is down 1.8% on Tuesday, tracking for its biggest daily percentage decline since Sept. 20 with some of the biggest drags from companies including Fedex Corp FDX.N, down almost 4%, and its rival United Parcel Service UPS.N, down 3%. Trucking companies are also falling.

Earlier, Bernstein cut its FedEx FDX.N stock rating to "market perform" from "outperform" ahead of Q2 earnings, due out Dec. 19, and an impending less-than-truckload $(LTL)$ freight spin off decision, in a note dated Dec. 2.

While Bernstein analyst David Vernon highlighted concerns that are specific to Fedex, which reports its results on Dec. 19, he also mentioned that "tariffs (likely under Trump) and changes to de minimis rules will hurt airfreight volumes."

As for Tuesday's move, Vernon told Reuters in a telephone interview that investors may be lightening their transport loads since recently "the stocks have moved very quickly on macro sentiment." Recent rallies may also have investors questioning whether Fedex can deliver results that match the strong sentiment when it reports quarterly results.

The Dow transportation average rose 8.4% in November for its biggest monthly gain since June 2023. In comparison, Fedex gained nearly 11% in November for its strongest rise since July of this year.

Separately, trucking companies were selling off on Tuesday after Saia Inc SAIA.O, which provides LTL, non-asset truckload, expedited and logistics services, failed to impress with the release of its shipment and tonnage update for the first two months of Q4.

Morningstar analyst Matthew Young said in an email that the data "suggests underlying trucking industry freight demand (especially from industrial end markets) has yet to see a material positive inflection point."

And Young also pointed to rallies in transportation and logistics following the U.S. Presidential election in November, to the point that "several have become a bit rich."

On Monday, logistics company ArcBest ARCB.O also provided an update for October and November.

On Tuesday, Old Dominion Freight Line ODFL.O, down 2.3%, was the second biggest drag on the transports average behind Fedex.

Other trucking companies putting pressure on the DJT included JB Hunt Transport Services JBHT.O, Matson Inc MATX.K, Ryder System R.N, all down more than 2% and Landstar System LSTR.O, down more than 1%.

(Sinéad Carew)

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