Why Union Pacific Shares Got Off Track in April

A combination of concerns about demand and an underwhelming earnings report had Union Pacific (NYSE: UNP) shares on the slow track for most of April. The shares traded down 14.2% for the month, according to data provided by S&P Global Market Intelligence, as uncertainty clouded the transportation sector.

Railroads and other transports are cyclical by nature, doing best when the economy is strong and there is a lot of demand to ship goods. Reports surfaced early in the month of April that truckers and to a lesser extent rail were suffering due to a flood of new capacity (mostly trucks) and waning demand as businesses adjust to soaring commodity prices. There was reason to fear that the Federal Reserve's resolve to fight inflation could crimp industrial activity, which could mean less demand for transports in the quarters to come.

Image source: Union Pacific.

Source Fool.com