The iShares Transportation Average ETF (NYSEArca: IYT) was in the red Friday morning as a nearly 6% sell-off in top holding United Parcel Service (NYSE: UPS) weighed on the fund.
UPS shares were under pressure after the company lowered its full-year profit outlook. Also, it expects second-quarter earnings to come in below Wall Street forecasts.
“Overcapacity in the global air freight market, increasing customer preference for lower-yielding shipping solutions, and a slowing U.S. industrial economy drove revenue and operating profit below expectations,” the company said. “In addition, UPS experienced some slowing in package volume growth as a result of labor negotiations.”
UPS is the fourth-largest holding in the Transportation Average ETF at 7.5% of the portfolio.
The fund enjoyed a big rally earlier this week driven by a surge in FedEx (NYSE: FDX) shares. [FedEx Ackman Talk Fuels Transportation ETF’s 4% Rally]
The Transportation Average ETF is up 22.9% year to date compared with a gain of 18.8% for the S&P 500.
“IYT holds rail companies, truckers, delivery-services firms, freight forwarders, airlines, and marine transport players. It contains 20 companies and is quite concentrated,” said Morningstar analyst Robert Goldsborough in a recent report on the ETF. “The top 10 holdings account for more than 67% of assets, and the top three holdings comprise more than 29% of assets.”
iShares Transportation Average ETF
