2 Railroad Stocks in Focus After Tentative Union Deal

Shares of Union Pacific and CSX are moving in opposite directions

Digital Content Manager
Sep 15, 2022 at 9:41 AM
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Railroad stocks are mixed this morning, following news that major U.S. railroad companies and unions reached a tentative deal last night, following 20 hours of talks, to stop workers from striking. U.S. President Joe Biden, whose administration brokered the talks, called the deal a "win for tens of thousands of rail workers." These unions will now vote on the potential agreement, which if passed will award double-digit salary increases to workers whose pay had been frozen.

Two stocks in the spotlight are CSX Corporation (NASDAQ:CSX) and Union Pacific Corporation (NYSE:UNP). CSX was last seen down 2.1% at $30.57, as traders digest news that the company has hired former Ford Motor (F) President Joe Hinrichs as its new CEO. Meanwhile, UNP is up 1.8% at $221.77 at last check.

Union Pacific stock slipped below recent support at the 50-day moving average yesterday, when talks were still shaky. The equity also breached its 100-day moving average, which captured a late-August pullback. The railroad name still sports 6.7% year-over-year lead, though. 

CSX saw a similar selloff yesterday, dropping to its lowest level since late July. The stock did manage to close above recent support at the $31 mark, though a rally off this region earlier this month was met with resistance at the 150-day moving average. Year-to-date, the security has shed 16.9%. 

Sentiment has remained relatively optimistic for both names. One example is UNP's Schaeffer's put/call open interest ratio (SOIR) of 0.65, which ranks higher than 7% of readings from the past year, implying short-term options traders have rarely been more call-biased. CSX sports a similarly low SOIR of 0.52, which stands in the 21st percentile of its 12-month range. r     

Short sellers have been hitting the exits, too. Short interest on CSX stock has dropped 22.8% over the last two reporting periods, while shorts have dropped 12.1% on Union Pacific stock in the most recent reporting period. 

 

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