What Happened?
A number of stocks fell in the afternoon session after WTI crude jumped 3% to above $105 per barrel and Brent surged 5% to over $114, following the UAE's interception of Iranian missiles and renewed concerns about the Strait of Hormuz.
Fuel is the single largest variable cost line for trucking, rail, and parcel operators, and the sharp move higher immediately compresses operating margins unless carriers can pass through fuel surcharges quickly which is harder in a softening freight environment.
Furthermore, with jet fuel reportedly trading near $4.56 per gallon, nearly double pre-war levels, and analysts warning of potential rationing in Asia and Europe, the entire global logistics chain faced both a cost shock and a routing problem.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Air Freight and Logistics company Hub Group (NASDAQ: HUBG) fell 4.1%. Is now the time to buy Hub Group? Access our full analysis report here, it’s free.
- Ground Transportation company Covenant Logistics (NYSE: CVLG) fell 5.7%. Is now the time to buy Covenant Logistics? Access our full analysis report here, it’s free.
Zooming In On Covenant Logistics (CVLG)
Covenant Logistics’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 4.9% on the news that the company reported mixed first-quarter 2026 financial results that featured better-than-expected revenue.
The freight and logistics provider posted sales of $307.2 million, a 14% increase from the prior year, surpassing Wall Street's forecasts. Its adjusted earnings per share (EPS) of $0.26 also beat analysts' expectations, though it marked a decrease from the $0.32 reported in the same quarter last year.
However, the company's adjusted operating income fell short of estimates, highlighting some underlying challenges. Investors appeared to focus on the strong top-line performance, sending the shares higher despite the mixed bottom-line results.
Covenant Logistics is up 41.8% since the beginning of the year, but at $31.62 per share, it is still trading 9.6% below its 52-week high of $34.99 from April 2026. Investors who bought $1,000 worth of Covenant Logistics’s shares 5 years ago would now be looking at an investment worth $2,798.
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