(Bloomberg) -- Industrial stocks were poised for a rally today after solid earnings reports from United Parcel Service Inc. and Raytheon Co., and a reversal of the defense and aerospace selloff that puzzled investors earlier this week. But transports are having none of that.
Airlines, rails and trucking stocks sold off sharply on Thursday after disappointing outlooks from American Airlines Group Inc., Southwest Airlines Co. and Union Pacific Corp., and a warning from Knight-Swift Transportation Holdings Inc. that “perhaps the most difficult” driver-sourcing challenge that it has seen will persist.
Knight-Swift shares are down 6.8 percent, “much too much,” Deutsche Bank analyst Amit Mehrotra wrote in a note to clients, adding that it is “a bit of an odd market, where results need to be ‘blow outs’ to sustain and increase equity value.” Mehrotra said Thursday’s declines also likely reflect the volatility inherent in truckload stocks, “resulting from the constant churn in the truckload share capital base.”
A standard gauge for the broader group, S&P 500 Industrials Sector Index, dropped as much as 1.2 percent earlier today, but recovered later and was little changed in the late afternoon. The transports average, however, was still down 0.4 percent, with American Air, Union Pacific and United Continental Holdings leading the decline. Meanwhile, the S&P 500 Index jumped as much as 1.4 percent today.
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