‘Old Economy’ is hot again, propelled by data and AI backlash

The once-sleepy companies that move goods — and people — through America’s roads, rails, skies and water are mobilising in a rapid rally.

After years of lagging the major US equities benchmarks, the Dow Jones Transportation Average is in the lead, outperforming the S&P 500 Index by 13 percentage points in the past month and a half, near the most since the financial crisis. The gauge — which contains industry stalwarts such as CSX, FedEx and Old Dominion Freight Line, and even United Airlines Holdings — has been catapulted higher by strong data and a pivot away from the big tech winners of the last few years.

The urge to diversify in the stock market is boosting the appeal of the “old economy.” Worries over disruption from artificial intelligence, as well as the hyperscalers’ massive capital spending plans for the technology, have led investors to yank money out of the sector and put it elsewhere. Manufacturing data further bolstered the case, providing an optimistic signal for those who seek safer investments.

Following last week’s readout from the Institute for Supply Management, which showed manufacturing activity expanded at the fastest pace since 2022 in January, the transportation gauge notched another all-time closing high. The gauge inched higher on Wednesday after a stronger-than-expected jobs report signalled the labour market is finding its footing.

“The sector is one of the most economically sensitive, as higher activity levels correspond with items needing to move around both the country (and the world),” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. Investors looking for alternatives to AI-tied stocks paired with a strong economy “further bolster the positive investment thesis.”

Transportation forms part of the “AI-resistant” trade, with investors increasingly looking to pick up companies whose main functions cannot be replicated by the technology.

Recent data has further aided transportation stocks in several ways, Mark Hackett, chief market strategist at Nationwide, explained.

“The direct is obviously if there’s increased demand for manufacturing, that definitely would increase the need for transportation,” he said. It also suggests the broader economy is improving and is a key technical signal for investors to move into stocks that are the first to benefit from an economic improvement.

Still, there are some who warn that future gains could be more limited, at least for some of the group. Citigroup Inc. analyst Ariel Rosa downgraded the recommendation on four truckers, including Old Dominion, after the ISM data. An improvement in their economic backdrop was “largely priced in” to shares, Rosa wrote to clients.

Leuthold Group’s Greg Swenson called airlines, railroads and cargo a “mixed bag,” last week. He was more sanguine on the outlook for air freight and logistics.

While Christopher Kuhn, a Benchmark analyst covering trucking stocks, noted that the ISM gauge has only been in expansion for a month, if demand picks up for truckers, the companies will be quick to benefit. He thinks the rally in the trucking sector has room to run.

“You just get a little bit of revenue growth, a little bit of volume growth and a little bit of pricing growth and you could see some pretty big incremental margins drop to the bottom line,” Kuhn said.

© 2026 Bloomberg

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.