Marketbites: U.S. Auto Industry Moving South
MARKET PERFORMANCE:
Portfolio Manager Commentary:
The Nasdaq Composite registered a fifth consecutive winning day, but still suffered its worst monthly loss of 2023. A recent string of positive sessions in which the S&P 500 and the Dow climbed for four straight days helped the indexes trim their monthly losses. Nevertheless, in August, the broad-market index lost 1.77%, while the Nasdaq shed 2.17%. The 30-stock Dow dropped 2.36%.
During the day, traders pored over new U.S. inflation data. The core personal consumption expenditures index increased 0.2% month over month in July and 4.2% year over year, matching estimates from economists polled by Dow Jones. The core PCE is a closely watched inflation indicator by the Federal Reserve.
“At the end of the day, equities are following bonds, so a continued decline in U.S. Treasury yields is the keystone in the bridge for more upside in stocks, at least in the near term,” said Joseph Cusick, senior vice president at Calamos Investments. “Absent a surprise result from the August U.S. nonfarm payrolls report on Friday, holiday-induced liquidity conditions are beginning to set in ahead of Labor Day.”
Investors will now turn their attention to non-farm payroll data due out this morning. Economists polled by Dow Jones forecast 170,000 additions. Traders are holding onto hope that the report will indicate that the economy is slowing meaningfully, and ultimately give the central bank reason to pause benchmark interest rate hikes.
Chart of the Day:
The U.S. auto industry is accelerating its move south as car companies pour billions of dollars into new factories in Georgia, Kentucky and Tennessee. The shift is creating pockets of frenzied activity—and anxiety—for rural, southern towns bracing for an influx of new workers and residents. Meanwhile, the Michigan region, long the stronghold of the auto industry, has lost some of its footing as the South has gained traction.
“It’s tremendously overwhelming, just everything that has to be done,” said Allan Sterbinsky, the mayor of Stanton, Tenn., a 400-person town preparing for the opening of a massive, auto-manufacturing complex currently being built by Ford Motor.
Source: WSJ
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