Although the economy still remains shaky thanks to debt worries in the U.S. and Europe, earnings season has started off pretty well for a number of companies. Apple thoroughly crushed estimates again after the bell on Tuesday while companies in the health care and banking segments have also put up solid numbers, leading some to believe that a corporate recovery is well underway. This was further confirmed by the robust report from railroad operator CSX, which posted a 22% gain in second-quarter earnings when compared to the year-ago period. Shipping volume was up slightly -- by about 3% -- suggesting that more goods are being produced and transported across the country, a positive development for trade. However, in order to confirm this trend, investors will likely look to the larger player in the space, Union Pacific, as they report earnings before the bell today.
In addition to the top and bottom line numbers, investors will likely focus in on how the company has integrated new members of its workforce into the fold and how sharply rising fuel costs have impacted profit margins. Many will also look to see how the flooding and other weather issues across much of the Midwest have impacted the company, as CSX -- which is mostly an East Coast railroad -- did not have to deal with these problems in its most recent quarter [ETF Plays On Planes, Trains, And Automobiles].
Thanks to this key earnings report, as well as CSX's solid performance earlier in the week, investors should look for the Dow Jones Transportation Average Index Fund
Should UNP manage to beat earnings estimates and keep up with the pace set by its rival CSX, look for IYT to have a strong Thursday session. If, however, UNP disappoints investors or warns on guidance for the rest of the year, look for IYT to continue its recent downward trend and finish the day lower [see more charts of IYT here].
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