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Forget about airplanes. Railroads are flying right now.
The Dow Jones US Railroads Index ($DJUSRR) closed at another record high yesterday. We cited the group earlier in the month but wanted to follow up because of a stunning chart from the Association of American Railroads:
Association of American Railroads weekly traffic chart. Chart courtesy AAR.org.
This graph shows traffic in thousands of carloads each week of the year, going back to 2015. Notice how the red line representing 2018 is in the process of climbing straight off the page.
Interestingly, this information came out from AAR yesterday around the same time the Federal Reserve’s Beige Book said “manufacturing shifted into a higher gear” in April and early May. “Rising goods production led to higher freight volumes for transportation firms,” the central bank added.
Remember that railroads are a classic forward-looking indicator of economic activity, so these latest readings may keep investors looking at industrials and domestically focused small caps. It’s also interesting that the recent numbers, including April’s better-than-expected trade report, seems to confirm the ongoing shift of the U.S. economy toward business investment. Consumer spending has been less impressive — not really a surprise when you consider how many shopping centers are closing.
We’ll keep following this trend on Market Insights.
This post is for educational purposes only and should not be interpreted as a trade recommendation.
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