The Dow Jones Transportation Average closed at $7,690.41 yesterday, March 14, up nearly 2.5 percent from the end of 2015 and more than 16 percent compared to the two-year low of $6,625.41 seen in January 2016.
Bellwether transportation and logistics stocks took a beating early in 2016 after a rough 2015, but have since rebounded to outperform the Standard & Poor’s 500 Index.
The Dow Jones Transportation Average, a U.S. stock market index that calculates the running average of the share prices of 20 major shipping companies, closed at $7,690.41 yesterday, March 14, up nearly 2.5 percent from the end of 2015 and more than 16 percent compared to the two-year low of $6,625.41 seen in January 2016.
The S&P 500, one of the most closely watched indexes of American stocks, dipped to a 22-month low in February due to “rising recession angst,” according to a report from Bloomberg news service, but transportation stocks were already back on the upswing.
The DJTA dropped more than 18 percent in 2015, compared with just a 0.7 percent slide for the S&P 500, as macroeconomic concerns caused widespread investor fear. The economic slowdown in China, rampant oversupply in the container shipping sector, and slumping commodities markets took their toll on companies across the various transport modes.
Since hitting bottom on Jan. 20, the DJTA has outpaced the S&P 500 by 6.6 percentage points, maintaining their lead during a rally that’s restored more than $1.5 trillion to U.S. equities since Feb. 11, Bloomberg reported.
Shares in blue chips FedEx Corp. and UPS Inc., for example, fell over 15 percent and 13 percent in value, respectively, over the course of 2015 and kept falling until they hit bottom on Jan. 20.
FedEx’s stock dropped another 17.3 percent, from $148.99 per share Dec. 31 to $123.18 at close of trading on Jan. 20, before bouncing back to close last night at $143.84 per share, still down 3.5 percent from the end of last year. Faring slightly better thanks to a strong holiday season, archrival UPS decreased another 7.8 percent, from the Dec. 31 close of $96.23 to the Jan. 20 low of $88.70 per share, only to rebound and end yesterday at $101.29 per share, a net gain of 5.3 percent from the end of 2015.
Some analysts are saying this is a positive signal that the United States economy is not headed toward another recession, but others remain unconvinced.
“There was clearly a signal in transports that may not have been so apparent if you weren’t paying attention,” David Joy, chief market strategist at Ameriprise Financial Inc., told Bloomberg. “They’re obviously a high-beta sector and general proxy for overall economic activity. The fact that the group is attracting some interest is also an important signal, at least temporarily.”
Transportation stocks rebound after rocky start to 2016
