The surge in transportation stocks has been widely interpreted as a forward-looking signal of economic improvement, with optimism centered on the idea that the effects of fiscal stimulus in 2026 will benefit old-economy stocks.
While there may be some truth to that line of thinking, it risks overlooking the extent to which transports had previously lagged. Like other groups we have highlighted—most notably health care and energy—transportation stocks materially underperformed the broader market.
Over the last three years, the Dow Jones Transportation Average has underperformed the S&P 500 by one of the widest margins ever recorded—ranking as the fourth-largest relative drawdown in history and reaching a deficit of roughly 62% in late October.
Against that backdrop, recent gains may reflect normalization from historically extreme conditions rather than a definitive shift in the future macroeconomic outlook.
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