Railroad stocks handily outperformed the Dow Jones Industrial average in a Wall Street rally that followed the release of unexpectedly strong economic indicators. Reuters said the new data "bolstered optimism that the worst of the global recession was past."
In early afternoon trading, the Dow was up 2.55%, with railroads showing the following gains: CSX, 7.02%; Union Pacific, 6.60%. Norfolk Southern, 6.53%; Burlington Northern Santa Fe, 5.95%; Canadian Pacific, 4.23%; Kansas City Southern, 3.2%; and Canadian National, 2.72%.
One welcome sign was the Commerce Department's report on Monday that U.S. construction posed an unexpected 0.9% gain in Ariel--the second month in a row that builders around the country increased spending. Economists had expected a 1.2% drop in April.
More good news came from the Institute for Supply Management, which said its May index of manufacturing was 42.8, its highest level since last September. Thomson Reuters analysts had anticipated a May index of 42.
Meanwhile, railroad traffic, while still registering double-digit losses, appears to have slowed its rate of decrease. U.S. carload traffic for the week ended May 23 was 21.5% below the corresponding week in 2008, but 4.9% ahead of the previous week.