By Paul R. La Monica
"Planes, Trains and Automobiles" isn't just the title of a classic 1980s comedy starring Steve Martin and the late John Candy. It's also one of the big themes pushing the stock market higher this year -- especially if you throw in trucks, railroads and boats as well.
The Dow Jones Transportation Average, which includes 20 bellwethers in the industry such as FedEx, Union Pacific, Southwest Airlines and Uber, is up about 7% already in 2026 to a new all-time high. The State Street SPDR S&P Transportation exchange-traded fund has done even better, surging roughly 10%. That's an encouraging sign for the broader market.
One of the tenets of the Dow Theory, developed by Dow Jones and The Wall Street Journal founder Charles Dow, is that it is bullish for the markets and economy to see transportation stocks hitting new records along with the broader Dow Jones Industrial Average. The DJIA is currently less than 1% away from the all-time high that it hit earlier this month. ( Barron's is owned by Dow Jones.)
"With both indexes breaking out simultaneously, a Dow Theory buy signal has been triggered, reinforcing the case that the primary trend for the broader market remains higher," said Adam Turnquist, chief technical strategist for LPL Financial, in a recent report.
Turnquist noted that when the Dow Transports and DJIA are both at all-time highs, that has tended to bode well for large-cap U.S. stocks in general. He said that since 1964, the S&P 500 has posted an average 12-month gain of 11.1% following simultaneous records for the Transports and Dow 30.
Investors in transportation stocks have largely ignored trade worries this year. Those concerns have eased since President Donald Trump announced a preliminary framework for a deal involving Greenland.
"For Dow Theory believers, a new high in Transports is welcome news amid the recent flood of geopolitical volatility," said Jackie Doherty, a contributing editor for Yardeni Research (and former editor at Barron's), in a report Thursday.
Doherty noted that much of the strength in the transportation sector has been due to rallies for trucking companies, such as J.B. Hunt Transport Services (which reported better-than-expected earnings earlier this month) and Old Dominion Freight Line.
She added that gains for shipping firms FedEx, United Parcel Service, C.H. Robinson Worldwide and Expeditors International of Washington have been an even bigger driver of the success of the transport stocks, particularly for the market-cap weighted S&P 500 Transportation Composite. (The DJ Transports, like the Dow 30, is weighted by stock price.)
"The air freight and logistics industry packs a bigger punch," she wrote, adding that FedEx and UPS in particular may get a lift as long as energy costs remain relatively low.
"Both companies have faced headwinds from the Trump tariffs, but they should have benefited from lower fuel prices," Doherty wrote.
Oil prices around $60 a barrel could give a boost to most transportation stocks. But investors may need to tread cautiously and be selective in the sector following the group's rally.
State Street's S&P transportation ETF is now trading at about 25 times 2026 earnings estimates, a premium to the broader market and higher than its 5-year average price-to-earnings ratio of 21.
FedEx and UPS look more attractive than the broader sector, with both trading around 15 times 2026 profit forecasts.
Airlines also appear to be reasonably valued, with Southwest sporting a forward P/E ratio of about 13 while Delta Air Lines and United Airlines, which both recently reported results that topped Wall Street's forecasts -- trade at about 8 times earnings estimates.
"Airlines are undervalued and underinvested, due mainly to a constant stream of negative headlines. But there's a lot to be bullish about," said Frank Holmes, CEO and chief investment officer of U.S. Global Investors in an e-mail to Barron's. His firm owns many of the major airlines in the U.S. Global Jets ETF.
"We're seeing evidence that higher-income travelers are booking at higher levels. Delta, for example, has shown strength in premium revenue growth and a more resilient customer base. Add in ancillary revenue streams, especially for value-focused carriers, and you get a more diversified revenue model than most people assume," Holmes added.
Whether the transportation rally can continue will depend on earnings and management commentary about the health of the U.S. economy. CSX and Alaska Air Group report earnings after the closing bell Thursday. Union Pacific -- which has proposed buying rival Norfolk Southern -- and UPS are due to report next week.
Write to Paul R. La Monica at paul.lamonica@barrons.com
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(END) Dow Jones Newswires
January 22, 2026 14:29 ET (19:29 GMT)
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