Transportation stocks are now officially part of the broader market rally — a win for the bulls.
The Dow Jones Transportation index (^DJT) touched 52-week highs on Thursday, up 21% year to date. The average, which includes stocks like American Airlines (AAL), rental company Avis (CAR), delivery services FedEx (FDX), and railroad operator Union Pacific (UNP), has been closely watched by strategists.
Historically, the stocks "act as an early indicator of strengthening economic conditions," Tim Anderson, managing director of TJM Investments, told Yahoo Finance on Thursday.
The timing for the peak is even more relevant because another important index, the Dow Jones Industrial Average (^DJI), is also at 52-week highs.
Yahoo Finance’s Jared Blikre recently highlighted a case for Dow Theory followers, which suggests if two averages reach notable new highs within the same short period, then the broader market is likely headed higher.
"Having both the Industrials and Transports making new 52-week highs is viewed as confirmation that a bull market is intact, and poised for further highs," added Anderson.
The tech-heavy Nasdaq (^IXIC), which kicked off the rally this year, is still the winner for 2023, up 35%. Some investors were initially concerned that its massive rally was due to a handful of major tech stocks.
By mid-June, the S&P 500 (^GSPC) was up more than 20% from its October lows, marking the start of a new bull market.
Other stocks have joined in on the market rally, with EV stocks outperforming in May and June.
Some strategists warn the broader breadth doesn't mean there won't be pullbacks, though.
"We do have seasonal headwinds to deal with. I don't think it's a straight shot to all-time highs in the Dow or the Transports here" Jay Woods, Freedom Capital Markets chief global strategist, told Yahoo Finance Live this week.
"But the momentum is clearly in favor of the bulls."
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre