Markets stabilized on Thursday after the dual sell-off in stocks and bonds, but a key corner of the equity market is blinking a caution light on the economy. The Dow Jones Transportation Average is headed for a losing week and has fallen back below its pre-April 2 Liberation Day levels. JB Hunt Transport Services and C.H. Robinson Worldwide have both dropped for four straight sessions. The performance of transportation stocks is often seen as a harbinger of the U.S. economy as they serve as an intermediary between producers and end customers. The chart of J.B. Hunt in particular is worrisome, as the stock is down more than 18% year to date. JBHT YTD mountain Shares of JB Hunt are trailing the broader market significantly in 2025. The struggles of transport stocks are not necessarily predictive of an economic downturn, but serve as a reminder that the outlook is still murky. Michael Reynolds, vice president of investment strategy at Glenmede, told CNBC that the odds of a recession have fallen in recent weeks due to the deescalation of tariffs on China and cautioned against reading too much into short-term moves over the past few days. However, his firm’s outlook doesn’t call for an economic boom, either, even as it sees upside ahead for stocks. “Are we going to get our trend 2-to-2.5% growth in 2025? We don’t think so. But there is a sort of muddle-through scenario here that is quite a bit more constructive, I think, for risk assets,” Reynolds said. Meager economic growth could be good enough to support corporate earnings and help put a floor under the equity market. However, simply avoiding a recession isn’t great news for investors if it takes a large amount of deficit spending by the government to prop up growth, and pushes up bond yields at the same time. “You have a debt problem, there’s three ways to get out: you inflate out, you grow out, or you default,” John Luke Tyner, head of fixed income at Aptus Capital Advisors, told CNBC. “And we know that default’s not an option. Significant austerity measures aren’t an option because it doesn’t get elected in D.C. So some combination of growth and inflation seems likely to persist to get out of this problem, and that’s going to pressure long-term yields.”
