Why Is The Transportation Sector ETF Crashing?

The transportation stocks have been getting crushed. As you can see on the following chart, the iShares Transportation Average ETF 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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