Transportation stocks sink, with industry ETF booking biggest drop since October

By Christine Idzelis

Airline stocks fell sharply Wednesday in wake of new Biden administration rule on cash refunds

Transportation stocks were punished Wednesday, with sharp drops weighing on an exchange-traded fund whose top holdings include airlines, railroads and a trucking company.

Shares of the iShares U.S. Transportation ETF IYT slid 2.4% , their worst daily performance since October, according to FactSet data.

The U.S. stock market broadly fared better - with the Dow Jones Industrial Average DJIA closing down 0.1%, the S&P 500 SPX eking out a gain of less than 0.1% and the technology-heavy Nasdaq Composite COMP rising 0.1%.

Airline shares fell Wednesday after JetBlue Airways Corp. (JBLU) warned about pressure on its 2024 revenue, and as investors considered a new regulation from the Biden administration that aims to make airlines provide automatic cash refunds to passengers who are owed compensation for circumstances such as canceled flights.

Transportation stocks were under pressure as corporate-earnings results continued to roll out for the first quarter.

All of the iShares U.S. Transportation ETF's top 10 holdings as of April 23 closed lower Wednesday, including ride-hailing company Uber Technologies Inc. (UBER), railroad company Union Pacific Corp. (UNP), Delta Air Lines Inc. (DAL), and shipping giants United Parcel Service Inc. (UPS) and FedEx Corp. (FDX), according to data on BlackRock's website.

Trucker Old Dominion Freight Line Inc. (ODFL), rail companies Norfolk Southern Corp. (NSC) and CSX Corp. (CSX), and airline companies United Airlines Holdings Inc. (UAL) and Southwest Airlines Co. (LUV) rounded out the ETF's 10 largest exposures as of April 23.

Shares of Delta finished 2.6% lower Wednesday, while United Airlines fell 2.5%, Southwest shed 0.5% and JetBlue slumped 3.1%, according to FactSet data. JetBlue was also held by the iShares U.S. Transportation ETF as recently as April 23, but the airline wasn't among its top 10 weights.

Meanwhile, Old Dominion closed with a steep drop Wednesday of slightly more than 11%, the worst-performing stock in the S&P 500, according to FactSet data. Shares of the company were down after it announced quarterly earnings results that missed analysts' consensus revenue estimates, FactSet data show.

The iShares U.S. Transportation ETF's large drop Wednesday has left the fund's shares with a tiny 0.3% gain for the year and lagging the broader U.S. stock market, FactSet data show. The S&P 500 is up 6.3% this year through Wednesday.

-Christine Idzelis

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04-24-24 1657ET

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