NEW YORK (TheStreet) -- Railroad stocks have remained calm even as the industry's labor situation moves closer to potential upheaval with each passing day.
The country's operators of Class I railroads remain in talks with three rail unions, who could opt to go on strike once a "cooling period" between the two parties ends at midnight on Dec. 6. The risk of a strike is mitigated however by a provision in the U.S. Constitution that could block any work stoppage.
The "Commerce Clause," or Article I, Section 8, Clause 3 of the Constitution says that Congress has the enumerated power "To regulate Commerce ... among the several States," and Congress can invoke that clause to prevent the strike and save the country from losing an estimated $2 billion a day.
|Congress can intervene in the railroad-union labor dispute|
"A shutdown of our nation's railways, which would harm our economy and endanger many American jobs, is unacceptable," House Speaker John Boehner (R., Ohio) said in a statement Tuesday. "The House is prepared to take legislative action in the days ahead to avert a job-destroying shutdown of our nation's railroads, in the event such legislation proves necessary."The railroad stocks moved modestly on Thursday with the biggest gainer of the day being Kansas City Southern (KSU), which closed at 68.77, up 74 cents, or 1.1%. The sector's biggest laggard was Norfolk Southern (NSC), which closed at $74.78, down 76 cents, or 1%. One railroad analyst, who spoke on the condition of anonymity, said that a rail stoppage is possible, but didn't think it would affect rail stocks in the long term. "It would probably dip, but it wouldn't change the long-term thesis in rail. ... I would generally think that they [rail stocks] would get beat up -- frankly, the market could probably get beat up on it, because it is an economic issue," the analyst said. President Barack Obama established on Nov. 5 a Presidential Emergency Board to issue recommendations for the parties involved to reach a labor agreement. As of Thursday, 10 of the 13 major rail unions have reached agreements with the railroads. The three that remain -- Brotherhood of Locomotive Engineers and Trainmen, the American Train Dispatchers Association and the Brotherhood of Maintenance of Way Employees -- make up 40% of the 132,000 employees in the current round of bargaining, according to the National Railway Labor Conference.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV