The transportation stocks have been getting crushed. As you can see on the following chart, the iShares Transportation Average ETF (NYSE:IYT) has been in a freefall.
This ETF is designed to track transportation stocks like those of truckers and railroads. This could be a signal that the recession that many analysts are predicting will arrive sooner than expected.
Sometimes, the action of stocks in particular sectors can be a leading indicator. If the economy is thriving, the companies that move goods and products should benefit. Their stocks should perform well.
But the opposite is true in a bad economy. As people buy less, there will be fewer goods and products that need to be transported.
The weak performance of stocks in the transportation sector may be a signal. It could tell us the recession people fear will arrive sooner than most pundits think.
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