The weakness of U.S. transportation stocks indicates the future of the U.S. economy. Despite the market’s upward trend, there are increasing concerns that the persistent weakness in transportation stocks reflects the economic outlook.
The Dow Transportation Index’s decline contributes to the weakness of many other indicators, tempering Wall Street’s growth expectations.
While the New York Stock Exchange shows signs of recovery, lagging transportation stocks underscore the lingering economic concerns. Last week, the S&P 500 index edged slightly, marking its first rebound in five weeks after falling more than 10% from its record high in February.
The Dow Jones Transportation Average, which includes stocks from airlines, trucking, rail, and parcel delivery firms, continues to decline, down over 17% from its November peak.
The Dow Transportation Index has shed 8% in 2025, more than twice the decline of the S&P 500 over the same period.
FedEx Corporation and United Parcel Service (UPS) have seen their shares tumble 18% and 9% this year. On the last trading day of last week, FedEx downgraded its annual financial outlook.
Trucking companies Landstar and JB Hunt Transport Services also slid over 12%. Airlines that recently lowered their earnings estimates faced steep stock declines. Delta Air Lines and United Airlines Holdings plummeted over 20% in 2025, while American Airlines Group nosedived nearly 35%.
The Dow Transportation Index, which includes companies that ship goods across the U.S., is a key indicator of consumer spending and economic growth.
Some investors use the Dow Theory, tracking both the transportation index and the Dow Jones Industrial Average to gauge overall market trends.
The Dow Industrial Average dipped 1% in 2025, about 7% below its December peak. In addition to the Dow Transportation Average, other indices cited by investors as signals of the broader market or economy also show sharp declines.
Chuck Carlson, CEO of Horizon Investment Services, told media outlets, “The transportation sector is a crucial indicator for future economic activity.”
The Russell 2000 index, typically sensitive to domestic economic health, has tumbled over 15% from its 52-week high in November. The Philadelphia Semiconductor Index has plunged more than 22% from its July peak.
Semiconductors are key components in various products, making chip manufacturers an important industry to watch closely for economic signals. Matthew Miskin, co-chief investment strategist at John Hancock Investment Management, noted numerous indicators suggest underlying weakness in the U.S. economy.
Consequently, attention is focused on indicators to be released this week, including consumer sentiment and confidence indexes. The Personal Consumption Expenditures Price Index, a key inflation metric, is due on March 28. The Trump administration’s planned reciprocal tariffs, set for April 2 to rebalance the global trade system, will also draw Wall Street’s attention.
Rick Meckler, partner at Cherry Lane Investment, stated, “Transportation stocks could be particularly volatile amid concerns over tariffs and the potential for a slowing economy.”
