Economist's Insights

Today’s Trading Activity – Stocks Ignored More Disappointing Auto Sales but Treasurys Took Notice

Aug 1, 2017

U.S. stocks rallied Tuesday as the Dow recorded its fifth consecutive daily record high close and the S&P and Nasdaq recovered from Monday’s losses. The Dow closed 24 points below its next major milestone – the 22,000 mark. On an intraday basis, the blue-chip index had briefly climbed to 21,990 earlier in the day. Financials led the S&P which, along with strength in technology and utilities, was enough to offset losses in shares of auto companies. General Motors’ 3.4% decline led losses for the sector with Ford’s 2.4% the second worst of the day. Ford reported a 7.4% decline in YoY sales while GM’s results showed a 15% plunge from July 2016. Total auto sales disappointed again with the biggest YoY decline since August 2010. While equities were shielded somewhat from the sector’s struggles, Treasurys rallied sharply as the weak auto sales data began to trickle in. On the day, the 2-year yield fell 0.8 bps to 1.34% while the 10-year yield dropped 4.1 bps to 2.25%. U.S. crude prices fell back below $50 on reports OPEC production grew in July and the API indicated U.S. inventories likely rose for the first time in five months. The Dollar stabilized and recovered marginally from yesterday’s 15-month nadir.