(Bloomberg) — Already shaky market sentiment took a gut punch on Thursday after used-car dealer CarMax Inc’s latest quarterly results laid bare the plight of US consumers stuck between high inflation and climbing interest rates.
Most Read from Bloomberg
CarMax’s fiscal second-quarter numbers failed to meet Wall Street’s expectations on nearly every metric. The company said the ability of potential buyers to afford vehicles has become a challenge, with rising interest rates and low consumer confidence adding further wrinkles.
The results sparked a steep selloff in CarMax shares, and weighed heavily on the stocks of its peers, as well as auto manufacturers and suppliers. CarMax was down as much as 23% in early trading, as was Carvana Co., while Sonic Automotive Inc. tumbled 16%.
“CarMax has reminded Wall Street that parts of the economy are already in a recession,” said Ed Moya, senior market analyst at Oanda Corp. The “affordability challenges” highlighted by the company as the main reason for the big miss suggests it is “only going to get worse as Fed tightening starts to impact the economy,” Moya added.
With investors continuing to search for clues about the fate of the US economy over the next few months and into 2023, they are closely watching for signs that can offer insights into the health and resilience of the consumer. CarMax’s earnings put a dent in whatever optimism existed.
“When you combine these results with the story from yesterday that demand for iPhones is weak, it raises the question about the consumer as we move toward the holiday selling season,” said Matt Maley, chief market strategist at Miller Tabak + Co. “If the consumer is weak, you can take a soft landing off the table.”
The Richmond, Virginia-based company’s shares were the biggest decliners on the S&P 500 Index as the market opened on Thursday. They were followed closely by General Motors Co., Ford Motor Co., and auto supplier Aptiv Plc., as investors worry about how the decisions of a squeezed US consumer will reverberate through the entire automotive industry, and the broader economy.
“The story of CarMax’s second-quarter is clear: demand destruction,” said Morgan Stanley analyst Adam Jonas. “High used car prices and rising rates are causing a buyers’ strike.”
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
(Reuters) -Used-car retailer CarMax Inc said on Thursday that an uncertain economic environment was starting to take a toll on vehicle demand, sending ripples through the auto sector, which has largely dodged a significant hit from inflation this year. CarMax shares tumbled 22% to $66.63 to hit a more than two-year low, after the company reported second-quarter results below analysts’ estimates and underscored the impact of inflation and rising interest rates on car sales. “Obviously, consumers are having to make decisions … I just think they are prioritizing their spend a little differently,” Chief Executive Officer William Nash told analysts, adding that softness in used-car sales continued in September.
The broader market was down sharply and that was certainly impacting Carvana stock. As of 12:01 p.m. ET, Carvana stock was down 18.5%. First, let’s recognize that Carvana is a volatile stock to begin with.
(Bloomberg) — The latest high-stakes drama between the world’s biggest superpowers is unfolding in the unlikeliest of places: a Hong Kong office tower full of accountants.Most Read from BloombergApple Ditches iPhone Production Increase After Demand FaltersMacKenzie Scott Files for Divorce From Science Teacher HusbandTrump Refuses to Delay Florida Deposition in Phone-Fraud Case Despite HurricaneNasdaq 100 Hits Session Low as Gloom Grips Stocks: Markets WrapThe UK’s Crisis of Confidence Was Years
(Bloomberg) — Sentiment has turned so bad for global equities that an indicator developed by Sanford C. Bernstein & Co. has sent a buy signal. Most Read from BloombergApple Ditches iPhone Production Increase After Demand FaltersMacKenzie Scott Files for Divorce From Science Teacher HusbandNord Stream Gas Leaks May Be a New Disaster for the ClimateGermany Suspects Sabotage Hit Russia’s Nord Stream PipelinesTrump Refuses to Delay Florida Deposition in Phone-Fraud Case Despite Hurricane“Another be
(Bloomberg) — Palantir Technologies Inc. has reupped and expanded more contracts with the US government that have been controversial within Silicon Valley. Most Read from BloombergApple Ditches iPhone Production Increase After Demand FaltersMacKenzie Scott Files for Divorce From Science Teacher HusbandTrump Refuses to Delay Florida Deposition in Phone-Fraud Case Despite HurricaneNasdaq 100 Hits Session Low as Gloom Grips Stocks: Markets WrapThe UK’s Crisis of Confidence Was Years in the MakingT
Earlier this week, the Dow Jones joined the S&P 500 and the NASDAQ in bear market territory. It marks the first time this year that the Dow has dipped below a 20% loss from peak – but it also marks a turning point in investor sentiment. A mood of doom and gloom is setting in. A change in times and a change in mood requires a change in outlook, a shift in perspective, for investors to succeed. With all three main indexes so far down, it’s clear that the last year’s modes of trading aren’t going t
Creating income for retirement is one of the biggest challenges American workers have in planning for how they will be able to live comfortably once they stop working. One of the most common ways to create this income is to … Continue reading → The post If You Have This Much Money Saved You Don’t Need an Annuity appeared first on SmartAsset Blog.
The CBOE Volatility Index has skyrocketed 89% so far this year. Morningstar put together a list of stocks with one- and three-year betas of 0.8 or lower. Then it screened for stocks that are undervalued, according to Morningstar analysts’ fair value estimates.
BENGALURU (Reuters) -The Federal Reserve will hike its key interest rate to a much higher peak than predicted two weeks ago and the risks are skewed towards an even higher terminal rate, according to economists polled by Reuters. That change in expectations came after the Fed raised rates by 75 basis points last week for the third straight meeting and foresaw going higher than it had previously thought to tame inflation, which is running over four times above target. Since then, already battered global stocks went much deeper into bear market territory – a decline of 20% or more – on fears of recession and most currencies weakened further against the multi-decade high dollar.