Day Trading Economic News Analysis: March 2, 2010
February motor vehicle sales slightly declined to 7.6 million from January motor vehicle sales declined of 7.9 million. Motor Vehicle Sales is an indication of consumer spending and confidence accounting for 20% of total monthly retail sales. Since most consumers borrow money to purchase the vehicles, the decrease in consumer spending could mean lower consumer confidence and negative economic conditions.The slight weakness is due to heavy snowstorms and February having fewer selling days than January.
These purchases are interest rate sensitive influencing both the stock and bond markets. The stock and bond market have an inverse relationship with one another.
- Low interest rates fuels higher vehicle sales. Strong vehicle sales mean higher corporate profits and higher stock prices. Higher sales could mean inflationary pressures maybe rising and eroding the purchasing power of the bond market.
- High interest rates as well as credit crunches and recessions would lead to poor vehicle sales. Corporate profits will be diminished leading to a lower stock market and powering the bond market.
Equities to watch on these sales numbers include: Automakers, Auto and Trucking Part dealers, Steel stocks and other commodities used for the purpose of producing vehicles.
Some of the stocks to watch within this sector include: Ford and American Axle. Ford (F) outpaced GM for the first time in 12 years gaining 17% market share as well as nearing its 52 week high price of $12.68 from last November's $8.14 share price. Auto part manufacturer American Axle (AXL) has been benefiting from Ford's gains and nearing its 52 week high of 10.90.
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