Key Highlights

● Norfolk Southern climbed on October 22 after third-quarter profit and revenue rose.

● Overall volume and intermodal traffic increased modestly.

● The pending Union Pacific merger still awaits regulatory approval.

● Diesel hit a record $6.53 a gallon in September.

Norfolk Southern (NYSE:NSC) climbed on Thursday, October 22, 2026, ranking among the gainers on the Dow Transportation Average after reporting third-quarter results that showed growth in both profit and revenue.

The gain came on a strong day for railroads, with investors favoring rail operators as record diesel prices tilt the economics of freight away from trucks.

The quarter

Norfolk Southern said its third-quarter profit and revenue rose. Overall volume increased modestly, and intermodal traffic, which carries shipping containers and truck trailers on trains, also grew modestly.

Those gains were smaller than at some rivals, but steady volume growth matters for a railroad. Rail networks carry high fixed costs, so incremental traffic can be turned into profit efficiently.

Norfolk Southern operates one of the major freight railroads in the eastern United States, connecting ports, industrial centers and consumer markets.

The Union Pacific deal

Hanging over the stock is the pending merger with Union Pacific (NYSE:UNP), which still awaits regulatory approval. A combination would join Union Pacific's western network with Norfolk Southern's eastern routes.

For Norfolk Southern shareholders, a pending deal means the stock often trades with one eye on its prospective partner as well as on its own results. Union Pacific itself rallied on Thursday after posting record third-quarter results.

"We executed at a consistently high level, enabling record financial results," Union Pacific's chief executive said in a filing.

Diesel and a rotation favor rail

Fuel costs were a key theme across the transport sector. Diesel hit a record $6.53 a gallon in September, and high fuel costs are hitting truckers harder than railroads, according to market data. Union Pacific's chief executive said: "Railroads are much more efficient. It costs us way less per ton to move products across the US."

Oil climbed further on Thursday, with Brent crude settling at $113.17 a barrel, its highest since May 4, after Houthi attacks in Saudi Arabia and a media report that the US and Israel plan renewed strikes on Iran after the November 3 midterm elections.

CSX (NASDAQ:CSX) surged after beating forecasts, and Ryder System (NYSE:R) soared after raising its full-year outlook, adding to a broad rally across the transports. Airlines also gained after Southwest Airlines (NYSE:LUV) reported record revenue.

Rails benefited from a rotation away from AI and chip stocks after Meta Platforms (NASDAQ:META) outlined heavy capital spending and Lam Research (NASDAQ:LRCX) gave a supply-constrained outlook. The Nasdaq Composite fell 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 lost 93.74 points to 7,663.43, its worst day since July. The Dow Jones Industrial Average ended essentially flat at 52,867.98, a one-month high according to market data.

About two of every three S&P 500 stocks rose, according to market reports, and Treasuries rallied, pulling the 10-year yield back below a closely watched threshold for the first time since September 22. Weekly jobless claims fell to 194,000, the fewest in about three months, a reassuring signal for an industry that depends on a healthy economy to keep goods moving.

Norfolk Southern Awaits Regulatory Milestones

Investors will watch for regulatory milestones in the review of the Union Pacific merger and for any updates from both companies on its progress. Fuel prices remain a key swing factor for rail volumes, especially with tensions in the Middle East keeping oil elevated. Economic data, including S&P Global's flash purchasing managers' indexes on Friday and third-quarter GDP on October 29, will offer more clues on the freight outlook, while the Federal Reserve's decision on October 28 will set the tone for borrowing costs.