Transport Drama Revs Up

YRC and USA Truck each rose modestly Wednesday, but other economically sensitive names such as Alcoa(AA Quote) and Newmont Mining(NEM Quote) finished in the red. Also, Freeport McMoran Copper & Gold(NEM Quote) slid 2.8% as the price of copper fell 1.7% to close under $3 per pound at $2.96 per pound. The Philadelphia Stock Exchange Gold & Silver Index fell 2.1%

Energy stocks fell even as oil rose 0.4% to close at $63.72 per barrel, a 14-week high. But crude futures reached an intraday high of $64.15, a level that gets stock investors nervous about economic growth. Exxon Mobil(XOM Quote), Chevron(CVX Quote) and BP(BP Quote) each dropped more than 1%. The Amex Oil Index lost 1.1%.

But the recent contraction in transports and other deep cyclical names doesn't mean the sky is falling.

"The recent slowdown in shipments is indicative of excessive inventories that built up over the summer," says John Lonski, chief economist at Moody's Investors Service. "This is still consistent with the soft landing."

Companies had too much inventory so they cut back on orders and shipments, which can be a temporary adjustment. The country is also witnessing a slowdown in production, which is another way companies are attempting to reduce excess inventories. Friday's report of businesses' new durable goods orders could again reflect that inventories are still ahead of sales, says Lonski. The consensus expects a 1.5% increase in durable goods orders, but Lonski believes the number may come in under those estimates.