Listen to Why Transportation ETFs are Revving Up

Transportation stocks were expected to benefit from lower oil prices and while that has been the case for airline stocks, other industry groups represented in IYT, including railroads, have struggled. Impressively, IYT and XTN are soaring as crude prices move higher.

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Perhaps more impressive is that transportation stocks are surging as the dollar does the same. Industrials could benefit because some members of the sector generate substantial portions of their revenue overseas. Transportation stocks are part of the broader industrial sector.

“The stocks of airlines, railroads, and shipping companies are thought to rise when the economy is on the upswing since they move the goods and raw materials that are fundamental to the economy. The economy is showing signs of strength near year end, with gross domestic product, the broadest measure of economic output, accelerating at its fastest pace in two years in the third quarter, the Commerce Department said last month,” reports the Journal.