Transport stocks take a hit on Wall Street on economic and tariff fears

Old Dominion Freight Line

21/02/2025 21:20

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      Old Dominion loses 8.5%; Avis Budget falls 7.2%
    

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      Airline stocks also among the biggest decliners
    

  
    By Sinéad Carew, Nikhil Sharma
       NEW YORK/BENGALURU Feb 21 (Reuters) - Transportation
stocks went sharply in reverse on Friday with the economic
bellwether Dow Jones Transport average index  .DJT  falling more
than 2.6% in its steepest daily loss since December 18 and its
third consecutive decline, as investors reacted to weak economic
readings and worried about tariffs. 
While the transport index pared its losses by the close, most of
its stocks fell for the day. Its biggest decliner was Old
Dominion  ODFL.O , finishing down 8.5%. Car rental company Avis
Budget  CAR.O , the second biggest loser, fell 7.2%. 
    Airlines were among the biggest decliners, with Alaska Air
Group  ALK.N  falling 6.9%, United Airlines  UAL.O  dropping
6.4% and Delta Air Lines  DAL.N  ending down 5.9%. Also among
the laggards were FedEx  FDX.N , which lost 5.3%, and Kirby Corp
 KEX.N , down 3%.
Earlier, S&P Global data showed U.S. business activity nearly
stalling in February and tumbling to a nearly 17-month low, with
fears over import tariffs and deep federal government spending
cuts, erasing soaring sentiment after the November U.S.
election.
Also on Friday a University of Michigan survey showed U.S.
consumer sentiment dropping more than expected in February to a
15-month low with inflation expectations jumping as households
worried about plans for steep, broad-based tariffs. 
And the data followed a downbeat forecast on Thursday from the
world's biggest retailer, Walmart  WMT.N  as it cited the need
for caution in navigating an uncertain geopolitical landscape,
sending its shares and the broader market down.
    As for the drivers for the transport declines, Robert
Pavlik, senior portfolio manager at Dakota Wealth, pointed to
questions about the health of the economy and concerns about
factors such as tariffs. 
President Donald Trump in his first month in office slapped an
additional 10% tariff on Chinese imports. While a 25% levy on
imports from Mexico and Canada was suspended until March, this
month he raised tariffs on steel and aluminum imports to 25%.
And on Tuesday Trump said he would impose auto tariffs "in the
neighborhood of 25%" and similar duties on semiconductors and
pharmaceutical imports. 
    The worry is that threats or implementation of tariffs will
boost prices and hurt demand for goods and in turn the carriage
of these goods by freight companies and home package deliverers.
    "When one is to contemplate the impact of what will be
shipped from other countries to the United States if, in fact,
the new administration moves forward with tariffs, there might
be a decrease of international deliveries and perhaps an
increase of domestic delivery," said Art Hogan, chief market
strategist at B Riley Wealth.
    The broader market also reflected a risk-off mood on Friday
with the three major Wall Street indexes losing more than 1%.
The Nasdaq was leading losses with a 2.2% drop.

(Reporting By Sinéad Carew; Editing by Will Dunham)
((mailto:sinead.carew@thomsonreuters.com; +13322191897;))