Stocks Continue to New Record Highs as Auto Sales Surge

Stocks Won’t be Slowed by Tax Reform Uncertainties – US financial markets traded within a tight range today as investors await further clarity on potential tax reform along with September’s payroll data set to be released this Friday.  There is a lot of uncertainty surrounding the new tax framework proposed by the Trump administration, including whether the reform will be deficit-neutral, will the wealthy actually benefit, and the potential elimination of state and local deductions in order to help fund the cuts.  The search for the next Fed chairperson when Janet Yellen’s term is done February 2018 also remains outstanding and is expected to be announced within the next couple weeks.  President Trump’s shortlist of potential candidates includes Janet Yellen, Kevin Warsh, Jerome Powell and Gary Cohn.

 

 

Major US stock indices are trading 0.1%-0.4% higher on day as the S&P 500 is poised to post a sixth consecutive day of gains, boosted by shares in auto and tech but weighed down by bank stocks.  Wells Fargo’s share price fell as much as 0.85% during the session following Tim Sloan’s appearance before Congress, where he was grilled for more than two hours on the firm’s retail bank account scandal.  US Treasury prices edged higher, with yields/swap rates down 1-2 bps across the curve and inching the 10-year note yield down 1 basis point to 2.33%.  Crude oil prices continued to ease back from last week’s rally, with increased production amongst OPEC members and rising US inventories weighing on market sentiment.  A barrel of WTI crude is currently trading near $50.40/barrel after reaching as high as $52.75/barrel last week upon entering into a bull market.

 

Auto Sales Surge with Post-Hurricane Demand

An otherwise light day for economic data reporting was highlighted by a rebound in US motor vehicle sales during the month of September, in large part a result of increased demand following Hurricane Harvey.  Shares in major US automakers traded higher as most posted their fastest monthly sales pace since last December.  Toyota Motor Corp. displayed the largest jump in sales, up 15% during September.  A research report published by IHS Markit projected roughly 500,000 in new motor vehicle purchases as a result of the damage from Harvey, while replacement buying after Irma and Maria is expected to show up in auto sales data later this fall.