The major benchmarks were mixed on Monday, although declining stocks outnumbered advancing ones. The S&P 500 (SNPINDEX:^GSPC) closed with a loss, but the Dow Jones Industrial Average (DJINDICES:^DJI) managed a small gain.
Today's stock market
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Financial stocks climbed as investors digested earnings reports and long-term interest rates rose. The Financial Select Sector SPDR ETF (NYSEMKT:XLF) jumped 1.7%. Energy stocks fell as the price of crude oil tumbled 4%, and the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) declined 2.1%.
Arconic soars on a buyout rumor
Shares of Arconic, the spin-off from Alcoa that manufactures finished metal products for the aerospace and automotive industries, soared 10.5% on rumors of a buyout. The Wall Street Journal reported (subscription required) late Friday that the company has been approached by capital management firms, including Apollo Global Management, LLC, according to sources familiar with the matter.
Arconic also may have also helped boost its stock with three announcements it made today. The company has landed its largest contract to date with Boeing to supply aluminum sheet and plate for all models of commercial aircraft, including the 787, 777X, and the fast-growing 737. The company also announced a two-year joint development program with Lockheed Martin to develop customized lightweight material systems and advanced manufacturing processes, including metal 3D printing. It also revealed a new titanium alloy for high-temperature applications (like jet engines) that is 50% lighter than alloys in use today.
Arconic shareholders were no doubt thankful for something to cheer about for a change. The company has reported a couple of disappointing earnings reports as new CEO Chip Blankenship navigates through a "transition year" of strategic review, and the stock is down 29.2% so far in 2018.
J.B. Hunt grows profits on strong trucking trends
J.B. Hunt, one of the largest trucking companies in North America, opened the earnings season for the logistics industry by reporting results that blew away estimates. The stock jumped 6.5% on the news, but ultimately settled to a 0.6% loss. Revenue increased 23.9% to $2.14 billion and earnings per share soared 55.7% to $1.37. Analysts were expecting Hunt to earn $1.28 per share on revenue of $2.06 billion.
J.B. Hunt's largest segment, intermodal, grew revenue 16% to $1.16 billion and increased operating income 22%. Dedicated contract services (DCS) revenue increased 29% to $530 million, integrated capacity solutions (ICS) revenue was up 56% to $347 million, and revenue from the truck segment grew 7% to $101 million.
The company's results reflect increased pricing power in the industry as domestic shipping booms and truckload capacity remains constrained. Intermodal had a 8% increase in revenue per load, or 12% including fuel surcharge revenue, and load growth of 4%. DCS had a 17% jump in revenue-producing trucks and a 10% increase in truck productivity. ICS had a 38% gain in volume and 13% higher revenue per load.
J.B. Hunt is seeing rising driver wages and higher costs for purchased rail and outsourced trucking, but the benefits of customer rate increases, higher volumes, and higher truck counts have been more than enough to offset those costs, resulting in a big profit gain for the trucker.