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Week 3 of September: Auto Stocks Outperformed S&P 500 Index

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Week 3 of September: Auto Stocks Outperformed S&P 500 Index PART 1 OF 8

Why Auto Stocks Soared in the 3rd Week of September 2017

Auto stocks in September

During the week ended September 22, the broader market traded on a mixed note, and the S&P 500 benchmark (SPY) ended the week with a minor rise of ~0.1%. Meanwhile, the stocks of mainstream US automakers General Motors (GM), Ford Motor (F), and Fiat Chrysler (FCAU) outperformed the broader market. Last week, GM, Ford, and FCAU rose 1.4%, 1.9%, and 7.7%, respectively.

In contrast, Tesla (TSLA) underperformed its peers and the broader market last week. TSLA ended the week with a value erosion of about 7.6%.

Why Auto Stocks Soared in the 3rd Week of September 2017

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On September 22, Fiat Chrysler stock was trading the highest among its peers, with year-to-date and quarter-to-date gains of 97.6% and 69.6%, respectively. The company’s strong 2Q results and reports about Chinese automakers’ interest in acquiring FCAU’s business could be key reasons why its stock has soared lately.

High expectations from US auto sales

US auto sales remained weak in August 2017. According to Autodata Corp., August US auto sales fell 1.9% this year compared to August 2016. These lower vehicle sales have ignited a debate about a downturn in the US auto sector. 

However, US truck sales rose 2.4% year-over-year in August after demonstrating weakness in the previous month. An increase in truck sales could benefit mainstream automakers’ 3Q profitability, which could be driving optimism in auto stocks in September so far.

Series overview

In this series, we’ll look at the possible reasons for mainstream automakers’ solid Wall Street performance in the week ended September 22. We’ll explore the key updates for auto stocks that occurred in the last few weeks. We’ll also take a look at some key technical levels for these auto stocks.

Read on to the next part to examine GM’s recent stock movement.

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