As the US economy slowly regains its vigor, Dow Theory continues to suggest no end in sight despite a vicious across-the-board sell off on Thursday. The following chart compares the performance of the Dow industrials versus the Dow transports over the past 12-months. Clearly you can see the more popular sector lagging while transport stocks were lifted to record highs as if investors were starved of good quality stocks and craving a pull back. This is a healthy sign especially in light of the lack of domestic catalysts prompting the recent move lower.
Shares in GATX Corporation (GATX) were propelled to an all-time peak at $60.00 as the freight leasing company announced earnings that exceeded expectations, boosted its forecast and announced yet another sizable stock repurchase program. Its shares are higher on the day by 15.7% and carry a 4.3% weighting within the Dow transports index helping buoy the average around the unchanged mark. Note that earlier the index bucked the downdraft and rose to a record. Shares in Union Pacific (UNP) – the heavyweight within the transports benchmark at 12.5% – gained by 2.74%. Norfolk Southern (NSC) and Kansas City Southern (KSU) are also in positive territory for the session. These four stocks comprise almost one-third of the Dow transports index.
Chart – Dow Transports and industrials compared