Dow Jones Hits Record High as CSX Lowers Outlook

CSX Earnings Talking Points:

• CSX Corporation beat estimates but forecasted weak revenue growth for the year ahead
• The rail company does not view a substantial pickup for industrial production in 2020 according to the company’s CEO
• The downbeat guidance may drag on the already lagging transportation sector in the months ahead

The Dow Jones hit another record high Wednesday as the market continued to enjoy recent trade war headway. US earnings season kicks into high gear next week, but some major US banks have already hinted at a strong showing. This afternoon brought earnings from one of the largest railroad companies in the US and gave insight into the transportation sector which is highly susceptible to economic conditions. CSX reported net earnings of $3.33 billion for 2019, up from $3.31 billion the year prior.

Dow Jones Industrial Average with CSX

However, revenue for Q4 decreased 8% compared to the same period in 2018, citing headwinds in the coal export market and volume declines. The company expects revenue to drift down to 2% or remain flat through the end of 2020. This may spur worry in the transportation sector in upcoming months as the revenue guidance could serve as a bellwether for economic activity in the US.

CSX CEO James Foote stated that they do not view a substantial pickup for industrial activity in the year ahead. Currently, manufacturing continues to contract in the United States according to ISM’s manufacturing index, now in its 5th month of contraction. However, the recent signing of the phase-one trade deal may provide support in coming months for the sector.

-- Written by Thomas Westwater, Intern Analyst for DailyFX.com

Contact and follow Thomas on Twitter @FxWestwater