If you buy into old trader tales and theories, then you might find something to like on the charts of two Dow Jones Indexes.
A nearly century-old theory, “Dow Theory” says that moves in the Dow Jones Industrial Average should follow the trend of the similarly-situated Dow Jones Transportation Average to make a durable trend.
The theory might not have much standing in a world dominated by tech giants and data center spending, but investors who live by the century-old theory have been looking for the two indexes to finally start going the same way. Year-to-date, the DJIA is up 8.72%, while the Transportation Average is down -2.5%.
Things might finally be starting to go the right way, though. On Wednesday, Dow disciples scored a win as J.B. Hunt Transport Services and United Airlines reported earnings, bolstering a flat Transportation index in after hours trading.
J.B. Hunt
The logistics and freight company J.B. Hunt hit it big on the top and bottom line, with revenues coming in flat at $3.05 billion, ahead of the IBES estimate of $3.02 billion. Profitability also improved, with the company reporting $170.8 million in net income (vs. $141.9 million expected by IBES.)
The company’s intermodal volume, which represents over half of its business, made the biggest contribution to the company’s operating income growth, growing 12% even as volumes declined 1% year-over-year.
United
Meanwhile, United followed competitor Delta in reporting the kinds of results you’d hope for from an ‘industry leader.’
The company met the Street’s profit expectations, reporting $900 million in adjusted net income (vs. $88.4 million expected.) That helped to cover for a small miss on the revenue front, with $15.2 billion in sales (vs. $15.329 billion expected.)
Still, as the airline industry continues to respond to adversity after April’s tariff tumble, United appreciated a bump from brand-loyal customers. Premium seat revenue rose 6% and loyalty revenue rose 9%. Taken together, the company guided for stronger results in Q4.
Rounding Up
J.B. Hunt rose over 12%, while United appreciated a modest 3% bump after its report. The effects of those small scores might be better-measured tomorrow as the industry digests the two Dow components’ reports and earnings call commentary.
At this juncture, though, it looks like sluggish transports might be finally turning a corner. For those bought into the Dow’s determinations, the pivot in transport stocks might soon confirm the bullish trend in the DJIA amid uncertain times in the market.
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