Transportation sector-related exchange traded funds jumped after UPS posted record quarterly earnings on Tuesday and projected an optimistic 2022 outlook.
The iShares Transportation Average ETF (IYT) increased 3.0% on Tuesday, breaking above its long-term resistance at the 200-day simple moving average and testing its short-term resistance at the 50-day simple moving average. Meanwhile, the broader Industrial Select Sector SPDR Fund (NYSEArca: XLI) was 1.1% higher.
United Parcel Services (UPS) shares surged 13.5% on Tuesday. UPS makes up 17.7% of IYT’s underlying portfolio and 4.8% of XLI.
United Parcel Service revealed record quarterly earnings on Tuesday and projected 2022 revenue above expectations on higher shipping rates and an increase in e-commerce demand, CNBC reports.
During the COVID-19 pandemic, there has been a jump in demand for express shipping, especially for business-to-consumer package deliveries as the temporary closure of many traditional brick-and-mortar stores pushed American consumers to do more shopping online.
UPS “obviously continue[s] to see strong demand for their services, which we also expect will continue given the ease of ordering online vs going to the store,” Cowen analyst Helane Becker says in a report reacting to earnings, Barron’s reports.
Furthermore, the stimulus money and savings helped fuel a burst of pent-up shopping demand. U.S. retailers reported a better-than-expected $886.7 billion in sales for the holiday season, or 14.1% higher year-over-year.
UPS showed an 11.5% increase in revenue to $27.77 billion over the last three months of the year, with average revenue per piece rising by 11.3%.
Looking ahead, the shipping company also projected revenue of about $102 billion for 2022, compared to an average Refinitiv-IBES estimate of $100 billion.
“I want to thank all UPSers for their outstanding efforts throughout the holiday season and for once again delivering industry-leading service to our customers,” said CEO Carol Tomé. “The execution of our strategy is delivering positive financial results and driving strong momentum as we move into 2022.”
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