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Why Auto Stocks Traded on a Negative Note in Week 32


Dec. 4 2020, Updated 10:53 a.m. ET

The broader market

As of August 13, the broader market has largely traded on a mixed note month-to-date, and the S&P 500 Index (SPY) has inched up by just 0.2%.

In the last couple of months, trade tensions between the United States and other regions, including China, Canada, and Europe, have continued to haunt auto investors. Mainstream automakers’ downward revisions of their 2018 outlooks have also hurt investors’ sentiments.

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Auto stocks’ weakness

In the week that ended on August 10, mainstream automakers (XLY) General Motors (GM), Ford Motor Company (F), and Fiat Chrysler Automobiles (FCAU) fell 3.0%, 3.0%, and 4.6%, respectively. These three companies released their second-quarter earnings results on July 25 and also revised their 2018 guidances downward, citing several factors, including rising raw materials costs.

Ferrari (RACE) and Toyota Motor (TM) also ended the week in negative territory with falls of 3.4% and 5.4%, respectively. In contrast, Tesla (TSLA) stock managed to rise 2.1% last week.

RACE and TSLA both announced their second-quarter results on August 1. While Tesla has risen 19.5% month-to-date as of August 13, Ferrari has fallen 8%.

Uncertainty surrounding the Section 232 tariffs could be another reason for auto investors’ negative sentiments. Read Is Section 232 Tariff Probe Inviting a Crisis for Automakers? to learn about how the tariffs could affect the auto industry.

Series preview

In this series, we’ll find out how auto stocks have traded in the last few weeks and also look at some key technical levels for these stocks for the week ahead. We’ll find out what important updates have come up for the auto industry lately. In the next article, we’ll begin by looking at Ford’s recent stock price movements.


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