what is Dow Jones Transportation Average (DJTA)

The Dow Jones Transportation Average (DJTA) is a price-weighted index of 20 large U.S. transportation companies. It is the oldest stock index in the United States, having been created by Charles Dow in 1884. Here are some key points about the DJTA:

1. **Historical Context and Evolution**: The DJTA was originally called the Dow Jones Railroad Average and included only 11 stocks, mainly railroad companies. Over time, it has evolved to include a more diverse range of transportation sectors such as air freight, ocean going shipping, and car rental companies. This evolution reflects changes in the transportation industry and the economy more broadly.
2. **Economic Significance**: The DJTA is closely watched as a leading indicator of the U.S. economy. Transportation stocks are sensitive to economic conditions, and the DJTA's performance can signal trends in the overall economy. For example, a rise in the DJTA can indicate increased economic activity and consumer spending, as seen in the relationship between the Dow Transportation Index and the Bureau of Transportation Statistics' Freight Transportation Services Index.
3. **Market Correlation**: According to Dow Theory, the DJTA is believed to confirm the trend of the Dow Jones Industrial Average (DJIA). A divergence between the DJTA and the DJIA can suggest a potential reversal of the market trend. This makes the DJTA a valuable tool for traders and investors looking to gauge market health and make investment decisions.
4. **Current Constituents**: As of May 2023, the DJTA includes companies such as Alaska Air Group, American Airlines Group, CSX Corp., and Uber Technologies, reflecting the shift in the transportation sector towards more modern and diversified services.
5. **Performance Metrics**: The DJTA has shown significant fluctuations over the years, with highs of 7508.71 in 2015 and lows of 25.90 in 1932, indicating its sensitivity to economic cycles. The index's performance can be influenced by various factors including technological advancements, regulatory changes, and global events that affect the transportation industry.

In conclusion, the Dow Jones Transportation Average is a historically significant and economically relevant index that provides insights into the performance of the U.S. transportation sector and broader economic trends.