By Lewis Krauskopf
NEW YORK (Reuters) – Even as U.S. stocks seek to regain their footing, weakness in a closely followed index of transportation shares is a sign of growing investor worries about the economy.
The S&P 500 as of Thursday was on pace to post a weekly gain after four straight negative weeks. The benchmark index was clawing back after it marked a correction last week by ending down over 10% from its February record high.
The Dow Jones Transportation Average was little changed for the week, but the 20-stock index has been pummeled recently. The gauge of airlines, truckers, rail companies, package delivery giants and other transport firms has slumped over 17% from its November all-time closing peak.
“The transports are an important tell on future economic activity,” said Chuck Carlson, chief executive officer of Horizon Investment Services. “The fact that they have significantly underperformed … gives me pause.”
The Dow Transports is struggling as investors are concerned about an economic slowdown, driven in part by uncertainty over the fallout from U.S. President Donald Trump’s back-and-forth tariff policies. The Federal Reserve on Wednesday downgraded its U.S. economic growth forecast this year to 1.7% from 2.1%, with central bank Chair Jerome Powell pointing to “unusually elevated” uncertainty.
So far in 2025, the Dow Transports are down about 8%, doubling the drop for the S&P 500 index in that time.
Weakness within the index has been broad. This year, shares of package delivery companies FedEx and United Parcel Service are down 12% and 7%, respectively. Trucking stocks Landstar and JB Hunt Transport Services are both off over 13%.
Shares of airlines, some of which recently cut their earnings estimates, have been hit particularly hard. Delta Air Lines and United Airlines Holdings have tumbled over 20% in 2025, while American Airlines has dropped 35%.
With many companies in the index involved in shipping products around the country, the Dow transports index offers insight into consumer spending, said Matt Maley, chief market strategist at Miller Tabak.
“It’s still an important indicator for the strength of the economic growth because it’s an indicator of the level of strength of the consumer,” Maley said.
The index’s slide is “supporting a lot of the weaker data that we’ve been seeing and supporting the lowering of expectations of economic growth around Wall Street,” Maley said.
Some investors track the transports index in concert with the Dow Jones Industrial Average to determine the overall trend of the market, known as “Dow Theory.” The Dow industrials index is down 1% in 2025 and about 7% from its December record high.
