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The Dow Jones Industrial Average ended slightly down on Thursday, with weak export figures offsetting lower-than-expected unemployment claims. Capital goods companies, however, posted a small increase on the back of a good earnings report from industrial and construction supply company Fastenal (Nasdaq: FAST ) . As one of the nation's largest distributors of manufacturing and building tools, Fastenal is often seen as a bellwether company whose results are indicative of the overall health of the industrial sector.
Fastenal reported Thursday that it brought in $802 million in revenue in the third quarter, up 10% from 2011. Seventy-three new stores helped to contribute to strong sales, even as the expense of bringing new locations online brought gross margins down slightly. Net income was up 13% to nearly $110 million. Fastenal has benefited from a recovering housing sector, and its strong results caused shares to jump 8.4% on Thursday's trading.
Other industrial supply distributors were also up on Fastenal's earnings. MSC Industrial Direct (NYSE: MSM ) , a supplier of metalworking, maintenance, repair, and operations tools and products, jumped 4.9% on unusually high volume. MSC Industrial will report its own earnings on October 22nd, and a good result would bolster the theory that a recovering housing sector is helping to drive forward the broader economy.
Ironically, homebuilders were among the worst performers in the capital goods space on Thursday, with the largest companies down 2% or more. These declines are small compared to the impressive gains homebuilders have wracked up in 2012, however, and this may be a simple case of investors looking to take profits. Indeed, the sector's biggest loser was The Ryland Group (NYSE: RYL ) , which was cut from a "Buy" rating to a "Sell" rating by MKM Partners in a notice to investors titled "Take Profits in Homebuilers Now." The Ryland Group lost 4.4% in Thursday's trading, but shares have almost doubled since the beginning of 2012.
Elsewhere, notably irascible activist investor Carl Icahn is shaking things up in the truck manufacturing business. After securing three seats on the board of directors at freight truck builder Navistar (NYSE: NAV ) earlier this week, Icahn made an unsolicited offer to buy "any and all" shares of Oshkosh Corporation (NYSE: OSK ) , a producer of heavy-duty vehicles for the military and municipal services. Icahn, who already owns significant stakes in both businesses, may plan to create shareholder value by merging the two truck makers into one company.
Icahn is one of the most successful investors alive today, so when he makes a big play to whip a company into shape, I pay attention. So do other investors: Oshkosh shares rose over 11% on Thursday, while Navistar went up nearly 3%. With the legendary investor putting billions of his own money behind this initiative, should you invest alongside Carl Icahn?