A century-old market indicator called the Dow Theory is signaling trouble ahead for stocks. The theory states that movements in the Dow Jones Industrial Average must be confirmed by transport stocks to be sustainable.
Currently, the Dow Jones Transportation Average has fallen 19% from its November peak, nearing bear-market territory, while the Industrial Average is down 9.3% from its December high.
This bearish signal comes amid worrying forecasts from airlines and retailers citing weak demand, and growing concerns about the impact of the Trump administration’s tariff policies on inflation and economic activity.