University of Arkansas

Walton College

The Sam M. Walton College of Business

What Does Wall Street Volatility Mean for Freight Markets?

Images suggesting falling stock prices are superimposed over a semi-truck
January 26, 2022  |  By Andrew Balthrop, Ron Gordon

Share this via:

It’s been a bad month on Wall Street. The S&P 500 fell 11% during the first 16 trading days of January — its worst start to a year in at least nine decades. Worse still, some analysts believe more bad days are imminent. 

Here’s what’s happening and what it means for freight markets.

An Uncertain Future

Successful investors usually attain that status by carefully analyzing how current trends should affect future stock prices. Investors are seeing several things that could spell bad news for the future and that uncertainty is fueling stock market volatility.

Inflation is causing much of the volatility. As inflation drove up prices for stocks (and nearly everything else) through much of 2021, the Federal Reserve took a wait and see approach. Its members will face a difficult balancing act when they meet to discuss combatting inflation later this week. If they raise interest rates too much, they will slow inflation, but stock prices will fall even further as the economy plummets into a recession. Conversely, if they do not raise interest rates enough, stock prices will rise, but so will prices for everything else.

Global uncertainty is also driving stock price volatility as 100,000 Russian troops line the Ukrainian border. President Biden has promised severe international economic sanctions against Russia if it invades Ukraine. Meanwhile, the Department of Homeland Security has warned that Russia may launch “destructive” cyberattacks against the U.S. if provoked. The whole situation is rife with the sort of uncertainty that Wall Street hates. It is made all the worse by uncertainty over whether the Omicron variant will be the last COVID-19 mutation to wreak havoc on the world’s economies.

Transportation Firms Should Not Panic (At Least Not Yet)

The pandemic’s supply chain disruptions have highlighted the importance of investing in supply chain resilience. While uncertainty and stock market volatility make it difficult to raise capital for things like increasing capacity, firms should not panic. Investment decisions that made business sense a month ago probably still make sense today. 

Inflation will be a story to follow for at least the next two years. The Federal Reserve’s handling of inflation will affect freight markets just as much as stock markets. Inflation-driven uncertainty has forced transportation firms to make difficult decisions about potential price and wage increases — slight miscalculations can prove disastrous given firms’ thin profit margins.  The Federal Reserve’s upcoming decision on interest rates, which some do not expect to take effect until March, will shape freight prices and wages in 2022 and beyond.


Post Authors:

Andrew BalthropAndrew Balthrop is a research associate within the Supply Chain Management Research Center at the University of Arkansas. His present research focus is on the interaction between the efficiency of freight transportation and government policy.  He has also done research in energy and environmental policy. He has published in the Journal of Operations Management, Journal of Business Logistics, Empirical Economics, and Energy Economics. Andrew received his Ph.D. in Economics from Georgia State University in 2012. 

Matt WallerRon Gordon is the Supply Chain Management Research Center's communications specialist. He has a U.S. History from the University of Arkansas.

Supply Chain Management Research Center

Walton College of Business

We engage industry, faculty, and students, serving as a trusted resource to exchange ideas, advance supply chain knowledge, and cultivate future industry leaders. Learn more...

Recent Posts

Company recruiters meet with students during networking event

Event Highlight: Spring '24 Supply Chain Pre-Career Networking Event

Thirty companies and over 200 students registered to attend our Spring '24 Supply Chain Pre-Career Fair Networking Event on Monday, March 11 - the day before the larger Walton Career Fair. This event takes place every semester and, once again, featured a networking luncheon with select SCMRC members and nominated students in the Razorback Recruiting Room before the open networking event took place upstairs in the SEC Club inside Razorback Stadium.

March 13, 2024 | By Nathan Bramwell

Students shadowing at JB Hunt

Event Highlight: Spring '24 NWA Supply Chain Shadow Day

The Spring '24 NWA Supply Chain Shadow Day took place on Friday, March 1 and featured 13 companies opening their doors and offering a great opportunity to learn about a day-in-the-life of a supply chain professional in a leading supply chain company right here in Northwest Arkansas.

March 4, 2024 | By Nathan Bramwell

Marc Scott, associate professor of supply chain management, led the 2023 Immersion Summit

Event Highlight: 2023 Supply Chain Immersion Virtual Summit

The 2023 Immersion Summit, hosted by the J.B. Hunt Transport Department of Supply Chain Management in the Sam M. Walton College of Business, took place virtually last week from November 9th through 10th. The purpose of the summit was to connect a diverse grouping of university students and faculty from across the nation with the thriving supply chain ecosystem in Northwest Arkansas.

November 17, 2023 | By Nathan Bramwell