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Previously immune to the selloff in the broader averages, things catch up to the Dow Transports Index (IYT -3%), with today's decline following yesterday's new all-time record.
Richard Russell alert? Followers of Dow Theory like to see industrials and transports moving together to confirm a trend. Prior to today's action the DJIA (DIA -1.2%) was down 2.3% YTD while the transports were up 2.3% - giving hope the broad market might be set to reverse course. Today's slump though, brings the transports into the red for the year.
Sterne Agee gets a tepid response from the market after initiating the airliners today: AMR (AMR -0.6%), Allegiant Travel (ALGT -2%), Delta (DAL -2%), JetBlue (JBLU -0.2%) and United Continental (UAL -3.2%) are all started with buys, and US Airways (LCC -3%) and Southwest Airlines (LUV -4%) are initiated with a neutral.
Fitch Ratings keeps its transportation-related ratings unchanged saying signs in the sector point to an economy growing, albeit at a slower rate. The usual suspects - higher oil and commodity prices, lower government spending and consumer tightening - were pinned by Fitch as leading causes for a slowdown in transportation activity.
Airline shares took a hit today as investors anticipate a wave of flight cancellations due to Hurricane Irene. The ripple effects are likely to be felt across the country as flights become grounded throughout major U.S. travel corridors. United Continental (UAL -2.9%), AMR (AMR -2.9%), Delta (DAL -5.8%).