The Morning Journal (Lorain, OH)
U.S. stocks fall on weak auto sales report
U.S. stocks started the second quarter with a thud after car makers reported disappointing March sales.
U.S. stocks started the second quarter with a thud Monday after car makers reported disappointing March sales, a possible warning about other types of spending. But a late recovery helped stocks avoid bigger losses.
Stocks tumbled in morning trading after automakers including Ford and General Motors said passenger car sales slumped last month. Auto parts and rental car companies also tumbled. Spending by shoppers is a critical part of economic growth and investors found themselves wondering if spending will keep growing as it has in recent years. Small companies slumped, as their performance is closely linked to U.S. economic growth.
While stocks recovered most of their earlier losses, the weak car sales still sent a chill through the market. Steven Ricchiuto, chief U.S. economist for Mizuho, said auto sales have been a major part of the U.S. economy recently, and if car sales fall, consumer spending would also weaken. That in turn might mean manufacturers and other companies won’t open as many factories or hire as many workers.
“If we’re starting to lose some of the momentum on autos, where is the momentum going to come from?” he said.
The Standard & Poor’s 500 index fell as much as 18 points around midday, but finished down just 3.88 points, or 0.2 percent, at 2,358.84. The Dow Jones industrial average lost as much as 145 points but wound up with a loss of 13.01 points, or 0.1 percent, to 20,650.21. The Nasdaq composite shed 17.06 points, or 0.3 percent, to 5,894.68. The Russell 2000 index of small-company stocks gave up 16.25 points, or 1.2 percent, to 1,369.67.
Ford, Fiat Chrysler, Toyota and Honda all said their overall sales decreased in March as passenger car sales kept falling. GM reported its sales were up thanks to stronger SUV sales, but its totals weren’t as good as experts expected.
Auto sales have reached all-time highs in recent years, but companies are offering more cash, incentives, and low-interest loans to draw in buyers. Investors are getting worried that companies will be stuck with vehicles they’ll have to sell for big discounts.
Fiat Chrysler lost 52 cents, or 4.8 percent, to $10.41 and General Motors stock fell $1.19, or 3.4 percent, to $34.17. Ford gave up 20 cents, or 1.7 percent, to $11.44.
Five of the eight worst performers in the S&P 500 Monday came from the auto industry. Auto parts retailer O’Reilly Automotive dropped $11.15, or 4.1 percent, to $258.69. Auto retailer AutoNation shed $1.45, or 3.1 percent, to $40.84 and Goodyear Tire slid 73 cents, or 2 percent, to $35.28.
Tesla said over the weekend that its deliveries jumped 69 percent in the first quarter to a record 25,000. The electric car company’s stock climbed $20.22, or 7.3 percent, to $298.52. Tesla’s market capitalization rose to $48.7 billion, greater than Ford’s.