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Price Action Of Transportation Stocks Indicates Slowing Economy

Transportation stocks are now reporting their third-quarter earnings, and it's important for investors to pay attention to what these leading market indicators have to say.

J.B. Hunt Transportation Services Inc. (NASDAQ:JBHT) is one of the largest trucking firms in North America. The company reported a solid third quarter, but earnings came in just slightly below what Wall Street was looking for.

Third-quarter revenues grew 11% to $1.44 billion, which is solid growth for a mature business. Earnings were $89.5 million, or $0.75 per diluted share, compared to $78.2 million, or $0.65 per diluted share. Wall Street was looking for total sales of $1.45 billion, with $0.78 in earnings per share.

The company's cash position and accounts receivable grew solidly, and so did shareholder's equity. All in all, it was a good quarter for this trucking firm. If Wall Street consensus was a little too high, then it was. This was still a solid report, and the company's financial health improved.

In the railroad industry, companies continue to deal with weakening demand for coal, but earnings are holding up on modest revenue growth and higher prices.

Union Pacific Corporation (NYSE:UNP) reported third-quarter sales of $5.57 billion, growing four percent over the comparable quarter last year. The company's earnings were $1.15 billion, or $2.48 per diluted share, compared to $1.04 billion, or $2.19 per diluted share.

Third-quarter revenues measured by total revenue carloads were flat. Most of the company's gain in total revenues came from price increases. Earnings met consensus, while revenues were just a hair below.

So there is growth out there, but it's modest and not necessarily the result of improving business conditions.

The stock market, as measured by its key stock indices, is taking the news positively, and there is a definite willingness on the part of institutional investors to keep buying if earnings reports don't disappoint too much.

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