DEFINITION of 'Dow Jones Transportation Average - DJTA'
A price-weighted average of 20 transportation stocks traded in the United States. The Dow Jones Transportation Average (DJTA) is the oldest U.S. stock index, compiled in 1884 by Charles Dow, co-founder of Dow Jones & Company. The index initially consisted of nine railroad companies - a testament to their dominance of the U.S. transportation sector in the late 19th and early 20th centuries - and two non-railroad companies. In addition to railroads, the index now includes airlines, trucking, marine transportation, delivery services and logistics companies.
BREAKING DOWN 'Dow Jones Transportation Average - DJTA'
Railroad Union Pacific is the only one of the original DJTA components to continue in the index.
The Dow Jones Transportation Average is closely watched to confirm the state of the U.S economy, especially by proponents of Dow Theory. This theory maintains that as the industrials make and the transports take, the DJTA should confirm the trend of the Dow Jones Industrial Average (DJIA), with a divergence indicating a potential reversal of the trend. In other words, if the DJIA is climbing while the DJTA is falling, it may signal economic weakness ahead, since goods are not being transported at the same rate at which they are being produced, suggesting a decline in nationwide demand.