Railroad stocks are taking a beating today, at the hand of President Joe Biden’s administration. Biden is attempting to curb anticompetitive behavior within the railroad industry, and the whole class of stocks is slipping. Even as the red-hot railroad play Kansas City Southern (NYSE:KSU) makes a big announcement regarding its coming merger, it couldn’t be saved.
Biden’s administration will be appealing to regulators in the coming weeks to try and stifle anticompetitive behaviors in both the rail and ocean shipping industries. According to The Street, anticompetitive pricing is leading to unfair market domination. On the railroad side, the White House will be meeting with regulators from the Surface Transportation Board.
The Wall Street Journal reports that an executive order will be coming at some point later this week to get the gears turning on this regulation. In anticipation of the order, railroad stocks are already slipping.
Union Pacific (NYSE:UNP) shares fell about 3.5% this morning after the news. CSX (NASDAQ:CSX) saw a dip of 5% on the news. Kansas City Southern is down nearly 7% so far today.
Biden’s Looming Executive Order Casts Shadow on Big Announcements for Railroad Stocks
Some big announcements are coming from railroad stocks today. But, it seems potential regulations are muddying the waters quite a bit. CSX announced a July 21 date for its Q2 earnings report. It’s possible that this news is keeping CSX from sliding further, as investors will have something to look forward to.
Kansas City Southern’s announcement is much larger in magnitude: The company has set a date for a vote on its looming merger with Canadian National Railway (NYSE:CNI). Shareholders will vote on Aug. 19 over the details of this merger. It is one of the most hotly contested mergers of the year, with CNI engaging in a fierce bidding war with Canadian Pacific (NYSE:CP). The merger will allow Canadian National to create the first single freight rail system spanning Canada, the United States and Mexico.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.