Over the past three months, the iShares Transportation Average ETF (NYSEArca: IYT), the ETF proxy for the Dow Jones Transportation Average Index, has tumbled more than 9% while the Dow Jones Industrial Average is off just 0.8%.

Wednesday’s 3.6% drop in shares of package delivery giant FedEx (NYSE: FDX) could represent another blow to IYT and rival transportation ETFs because while airline and railroad stocks, major parts of IYT’s lineup have recently flailed, FedEx has held firm.

After the company said it is unlikely to earn the $2.67 per share analysts are expecting for its fiscal first quarter, FedEx’s ability to provide near-term for the struggling IYT and the equal-weight SPDR S&P Transportation ETF (NYSEArca: XTN) is threatened. [Alternative View of Transport ETFs]

“With today’s gap down in FDX, I am looking at $174, below, as marking a dividing line as to whether the recent breakout will hold, or instead will represent a tipping point of the bifurcation discussed above within the sector. We know the airlines and rails are rather beaten-down here, so perhaps a mean-reversion trade could materialize with FDX coming in while the laggards bounce,” according to Chessnwine of MarketChess.

The $870.5 million IYT devotes 13.5% of its weigh to Tennessee-based FedEx, making the stock the ETF’s largest holding by a wide margin over FedEx rival UPS (NYSE: UPS). XTN, home to almost $397 million in assets under management, has a 2.7% FedEx allocation, making the stock the ETF’s fourth-largest holding. Airlines and railroads combine for over 34% of XTN’s weight and nearly 39% of IYT’s lineup.

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