Stock Market Update: Planes, Trains and Steamships Haul Stocks Higher

Shares of transportation-focused companies were flying high Thursday, leading the stock market up after some blue chip companies in the sector reported surprisingly strong earnings.

The S&P 500 Transportation Sector Index, which tracks the performance of transportation and logistics companies within the broader S&P 500, rose 1.39 percent during early morning trading, outpacing the 0.23 gain percent in the S&P 500.

Earlier in the day, railroad stalwart Union Pacific (NYSE:UNP), major airline Southwest Airlines Co. (NYSE:LUV) and logistics specialist GATX Corporation (NYSE:GMT) delivered fourth-quarter earnings that exceeded the expectations of Wall Street analysts.

Both Union Pacific and Southwest Airlines were able to increase revenue during the fourth-quarter while aggressively managing the rising fuel costs.

Union Pacific saw freight volume increase across all categories, growing revenue to $5.11 billion and reporting earnings of $1.99 per share, a 24 percent jump over the previous-year quarter. Consensus analyst expectations had been for revenue of $5.06 billion and $1.82 per share. Southwest Airlines's traffic jumped 26 percent, at least partially attributable to gains in market share from the acquisition of rival AirTran. The company's bottom line grew 16 percent when compared to the year-ago period, largely boosted by favorable gains from hedging gasoline futures.

While the companies both sounded positive notes on the just-ended quarter, they diverged on expectations from the future.

Looking ahead, we expect continued slow but steady economic growth in 2012, Jim Young, Union Pacific chairman and CEO, said in a press release.

That was a far cry from the cautious statements from Southwest Airlines, whose CEO said in a conference call after the earnings report that costs would increase in the current quarter, as the cost advantage between his carrier and competitors continued to erode.

GATX Corporation, a company that mainly leases railcars but also engages in other areas of the transportation and logistics sector, offered an even wider view into the fortunes of the industry segment. While reporting robust growth in all its revenue-generating items, it saw a particular explosion in profits coming from its North American steamship operations.

Shares of all three companies were up Thursday. Southwest Airlines had gained 1.44 percent in early-morning trading on the New York Stock Exchange, up 13 cents to $9.15. Union Pacific rose by 3.39 percent to 113.54, a gain of $3.59 for the day. After rising 35 cents, GATX Corporation was up by just 1 cent to $44.81.