Century-Old Dow Theory Flashes Bullish Sign for US Equity Rally
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Natalia Kniazhevich and Matthew Griffin
Fri, December 5, 2025 at 12:30 PM GMT+2 2 min read
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(Bloomberg) — Equity traders looking for signs that a blistering stock-market advance is set to continue may take their cue from the companies that move goods across America’s roads, rails and waterways.
The Dow Jones Transportation Average has gained for nine consecutive days, a winning streak seen just five other times this century. It blew past a resistance level where gains have stalled over the past yea.
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Truckers, shippers, airline and railroad companies carry goods and services that stock the US economy, and a breakout in their share prices soothes nerves of investors worried that growth will eventually sour. That’s also good news for adherents to the Dow Theory, which argues that transport and industrial averages must “confirm” each other’s moves for rallies to be durable.
“If the Dow Jones Industrial Average is climbing, that’s fine, but if the Dow Jones Transportation Average confirms the move, that means something deeper: companies aren’t just producing, they are delivering,” wrote Mark Malek, chief investment officer at Siebert Financial. “When both march higher together, it means economic reality is aligning with market optimism.”
The rally in transportation stocks comes as investors brace for a Federal Reserve interest-rate decision next week, where a cut is widely expected. It’s also coincided with nascent signs of a rotation out of technology high-flyers and and into smaller economically-sensitive names.
Expeditors International of Washington Inc. (EXPD), Southwest Airlines Co. (LUV) and Delta Air Lines Inc. (DAL) each gained more than 10% last month. By contrast, Nvidia Corp. (NVDA) lost 13% during that time.
Earlier: Before the Bell: Record High in Sight as Rally Broadens
“The transport rally has bigger implications for rallies in the equal-weighted S&P,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “We believe that the rotation we have seen since last month out of the AI themed ecosystem names will continue.”
Industry-specific factors support investor outlook around the group as well. New mandates around Commercial Driver’s Licenses and English speaking proficiency tests have threatened to reduce the number of drivers in the trucking market by keeping those who are not proficient in English off the roads. To Lee Klaskow, Bloomberg Intelligence’s senior freight transportation and logistics analyst, it means that supply will tighten and freight rates will move higher in the long run.
Whatever the reason behind the recent breakout in transportations stocks, it’s a bullish signal for the broader stock market, according to Michael Kantrowitz, chief investment strategist at Piper Sandler & Co.
“Nothing would be a clearer sign of the market broadening out than seeing transportation stocks outperform,” Kantrowitz said. “They’ve seen persistent underperformance during the past three years of a bifurcated economy.”
—With assistance from Alexandra Semenova.
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