The U.S. economy may be starting to crack, according to the recent performance of two notable stock indexes. The Dow Theory, which is over a century old, suggests that the behavior of the Dow Jones Industrial Average and the Dow Jones Transportation Average could send important signals about the health of both the market and the economy. Here's why. The Dow Industrials represent the productive capacity of the economy, as its original focus was on the goods-producing sector.
Such a divergence could imply a supply glut is in the offing. That could force manufacturers to cut back on production and lay off workers. We'll see. Utilities' recent outperformance It's also interesting to note the action in the Dow Jones Utility Average , which is outperforming Transports and Industrials. .
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