What a difference a month makes.

On July 7, the 20-stock Dow Jones Transport Index (DJTI) hit an all-time closing high of $5,618.25. Four of the 20 stocks in the index—FedEx Corp., Union Pacific Railroad Co., C.H. Robinson Worldwide Inc., and CSX Corp.—hit 52-week highs.

That was then.

On Aug. 8, the DJTI plummeted 7.3 percent, declining more than 330 points to $4,363.50, as part of a broad equity market sell-off triggered by concerns over economic weakness in the United States and Europe, and Standard & Poor's Aug. 5 decision to lower its rating on U.S. sovereign debt from AAA to AA+.

The transports' Aug. 8 decline is the exclamation point on what has been one of the ugliest periods in the index's long history. During the July 7 trading day, the transports hit $5,627.00 before pulling back near the close. Since then, the index has fallen 22 percent and has presaged what has become a nasty fall in the other major stock averages.

Analysts believe the month-long downturn in the transport index reflects the investment community's efforts to price in what may be a weak U.S. holiday shipping season and a weak first quarter of 2012. Financial markets tend to anticipate broader economic conditions by about six months.

The index is seen as a leading indicator of economic vitality because shipping activity signals demand for goods, and producers will not commit to shipping unless they are confident of future order flows. In 2006, for example, trucking companies—which move about 70 percent of all intercity commerce—saw demand fall off sharply, signaling the start of a four-year truck recession. Within a year or so, the broader economy had slipped into what would become known as "The Great Recession."

Rosalyn Wilson, senior analyst of Delcan Corp. and author of the annual "State of Logistics Report" as well as a monthly freight shipment and spending index published by auditing and payment firm Cass Information Systems Inc., has been gloomy about the economic and shipping outlook in the United States for several months and doesn't see the situation improving anytime soon. And Scott Davis, chairman and CEO of UPS Inc., which moves the equivalent of 6 percent of U.S. gross domestic product, has forecast growth of as little as 1 percent in the United States for the rest of the year, adding that UPS's strong financial results have stemmed from international growth and its own ability to execute, rather than to any tailwind from the U.S. economy.

Of the 20 stocks in the index, 15 are involved exclusively in the cargo business. The remaining five are airlines that generate most of their revenue carrying passengers, though they all have ancillary freight divisions that have historically been profitable.