The nearly weeklong winning streak for the transportation exchange traded fund (ETF) seems to have ground to a halt. After rising 5.2% since April 11, the iShares Dow Jones Transportation Average (IYT) is down 2.4% midday.
Airline woes could be weighing on the fund. Continental (CAL) reported that ever-rising fuel costs contributed to a loss in the first quarter, the Associated Press reports. Fuel has become the airline’s biggest expense, passing up labor. Continental is 1.9% of IYT.
Year-to-date, the fund is up 11.8%. It had been rising despite high oil prices. Air transport, in particular, is sensitive to fuel prices, reports Investor’s Business Daily. Six of the 20 stocks in the fund center largely around planes.
If oil prices come down, one economists predicts that the fund could go on a run, especially since the last time the cost of fuel was so high, cars and trucks were much less efficient than they are now.
For full disclosure, some of Tom Lydon’s clients own shares of IYT.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.