Dow Jones Transportation Average (DJTA)

What Is the Dow Jones Transportation Average?

The Dow Jones Transportation Average (DJTA), at times basically known as the "Dow Transports" is a price-weighted average of 20 transportation stocks traded in the United States. The Dow Jones Transportation Average is the most seasoned U.S. stock index, first compiled in 1884 by Charles Dow, co-pioneer behind Dow Jones and Company.

The index initially consisted of nine railroad companies and just two companies from outside the railroad industry. That is a testament to the dominance of railways in the U.S. transportation sector in the late nineteenth and mid twentieth hundreds of years. Notwithstanding railways, the index presently incorporates airlines, shipping, marine transportation, delivery services, and logistics companies.

Understanding the Dow Jones Transportation Average

Transportation is substantially less important to the overall stock market than it was the point at which the DJTA was first made. Be that as it may, transportation stocks can follow an unexpected pattern in comparison to the remainder of the market. Once in a while, they can help traders and investors to foresee changes in the market.

Forecasting the course of the Dow Jones Industrial Average is one of the primary purposes for the Dow Jones Transportation Average.

The Dow Jones Transportation Average is closely watched to confirm the state of the U.S. economy, particularly by defenders of Dow Theory. This theory keeps up with that as the industrials make and the vehicles take, the DJTA ought to confirm the trend of the Dow Jones Industrial Average (DJIA). A divergence demonstrates a likely reversal of the trend.

All in all, assuming that the DJIA is moving while the DJTA is falling, it might signal economic weakness ahead. A divergence means goods are not being shipped at similar rate at which they are being created, recommending a decline in cross country demand.

The DJTA traded at a record high of 12,917 on December ninth, 2020, not too long after the index fell below 6,800 in March 2020 as concerns over the coronavirus (COVID19) devastated airline stocks during a deep bear market. The Dow Jones Industrial Average (DJIA) had continued to arrive at new highs until February of 2020. This divergence of the DJTA and the DJIA before the crash was one more confirmation of Dow Theory.

The more well known Dow Jones Industrial Average (DJIA) outgrew the original Dow Transports index.

Components of the Dow Jones Transportation Average

As of November 2020, the index consisted of 20 companies:

1. Alaska Air Group, Inc. (ALK)
2. American Airlines Group Inc. (AAL)
3. Avis Budget Group, Inc. (Vehicle)
4. C.H. Robinson Worldwide, Inc. (CHRW)
5. CSX Corp. (CSX)
6. Delta Air Lines, Inc. (DAL)
7. Expeditors International of Washington, Inc. (EXPD)
8. FedEx Corp. (FDX)
9. J.B. Chase Transport Services, Inc. (JBHT)
10. JetBlue Airways Corp. (JBLU)
11. Kansas City Southern (KSU)
12. Kirby Corp. (KEX)
13. Landstar System, Inc. (LSTR)
14. Matson, Inc. (MATX)
15. Norfolk Southern Corp. (NSC)
16. Ryder System, Inc. (R)
17. Southwest Airlines Co. (LUV)
18. Union Pacific Corporation (UNP)
19. United Airlines Holdings, Inc. (UAL)
20. United Parcel Service (UPS)

Changes in the DJTA are rare, and they typically just happen following a corporate acquisition or other sensational changes in a component's core business. Notwithstanding, Union Pacific is the only one of the original DJTA components to continue in the index.

Should a component should be supplanted, the whole index is evaluated. Alaska Air Group, Inc. supplanted AMR Corporation on December 2, 2011, after AMR Corp. declared financial insolvency protection. Effective October 30, 2012, Kirby Corp. supplanted Overseas Shipholding Group, Inc. Effective October 1, 2014, Avis Budget Group Inc. supplanted GATX Corporation. On October 15, 2015, American Airlines Group Inc. supplanted Con-way.

Highlights

• Changes in the DJTA are rare, and they normally just happen following a corporate acquisition or other sensational changes in a component's core business.
• The Dow Jones Transportation Average (DJTA) is a price-weighted average of 20 transportation stocks traded in the United States.
• The Dow Jones Transportation Average is closely watched to confirm the state of the U.S. economy, particularly by defenders of Dow Theory.
• Notwithstanding rail lines, the index presently incorporates airlines, shipping, marine transportation, delivery services, and logistics companies.