A healthy economy is the basis for a strong stock market. Conversely, a weak one would lead to the central banks cutting interest rates, which encourages stock buying. The Manheim Used Vehicle Value Index is flashing weakness in the automotive market.
The Index showed a 7.0% Y/Y drop in used vehicle prices. Weak demand in this market suggests that General Motors (GM), Stellantis (STLA), and Ford (F) will have trouble selling their 2024 models. Watch out for selling pressure in those stocks.
The EV unit for GM and Ford has challenges ahead. Despite weak sales for Ford’s F-150 Lightning EV, the firm is raising prices. This would discourage consumers from considering the EV.
In China, EV giant Nio Inc. (NIO) formed a bearish top. The rally to over $9.00 lost momentum. NIO stock closed at $7.93 on no specific news. Shares are trending lower on negative sentiment on China’s economy and weak real estate market. In addition, China Evergrande EV shares lost one-quarter of its value yesterday on the news that authorities detained its executive director, Mr. Liu Yongzhuo.
The unexpected action against the director is in accordance “with the law on suspicion of illegal crimes,” according to a filing on the Hong Kong exchange.
In the energy sector, Schlumberger (SLB), Halliburton (HAL), and Marathon Oil (MRO) will try to bounce back from yesterday’s sell-off. Oil prices keep trending lower, which puts pressure on the earnings of these firms.