What is Dow Jones Transportation Average (DJTA)
The Dow Jones Transportation Average is 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, first 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.
Composition of the Dow Jones Transportation Average
As of April 2010, the index consisted of 20 companies:
- Alaska Air Group, Inc.
- American Airlines Group, Inc.
- Avis Budget Group, Inc.
- C.H. Robinson Worldwide, Inc.
- CSX Corp.
- Delta Air Lines
- Expeditors International
- FedEx Corporation
- JB Hunt Transport Services, Inc.
- Jetblue Airways Corp.
- Kansas City Southern
- Kirby Corp.
- Landstar System, Inc.
- Matson, Inc.
- Norfolk Southern Corp.
- Ryder System, Inc.
- Southwest Airlines, Inc.
- Union Pacific Corp.
- United Continental Holdings
- United Parcel Service, Inc.
Changes in the DJTA are rare, and they usually only happen following a corporate acquisition or other dramatic shifts in a component's core business. Should a component need to be replaced, the entire index is reviewed. Alaska Air Group replaced AMR Corporation on December 2, 2011, after AMR corp. filed for bankruptcy protection. Effective October 30, 2012, Kirby Corp. replaced Overseas Shipholding Group, Inc. Effective October 1, 2014, Avis Budget Group Inc. replaced GATX Corporation. On October 15, 2015, American Airlines Group replaced Con-way.
On May 27, 2014, closed above 8,000 points for the first time, and it closed above 9000 for the first time on November 10, 2014. At the close of 2014, the index hit 9139.92. At the close of 2015, the index hit 7508.71, a loss of 17.85 percent on the year.