(Detroit)

An absolute nightmare befell the auto sector yesterday. While the market has been increasingly concerned about the effect of Trump’s metal tariffs and the counter-tariffs from trading partners, yesterday’s meltdown was sparked by poor earnings. It started with GM and Fiat Chrysler, both of whom got walloped on weaker than expected earnings. Then Ford came in with an $11 bn restructuring plan that seemed to contradict the promised $25 bn of cuts it had previously announced. What was odd about the numbers is that they come when the economy is doing quite well. “To have a quarter like this is striking … Every time they turn over a rock, they find more problems”, says one auto market analyst.

FINSUM: Between looming tariffs and weak underlying sales, car companies seemed to be facing a definite reversal of fortunes after several years of good performance.

(New York)

Alongside rising rates and yields, accelerating dividends are a nice feature to have right now. The S&P 500’s dividend growth over the last five years has averaged 13.4%. However, every stock on this list has seen growth north of 20%. The five stocks, which come from quite varied sectors, includes UnitedHealth Group, AO Smith, Zoetis, Mastercard, and Nvidia.

FINSUM: The only catch for this group is that dividend yields, on average, are low, with UnitedHealth Group having the highest at 1.4%, well behind the average S&P 500 yield. The advantage, however, is that a stock with strongly rising dividends is more likely to see capital appreciation.

(San Francisco)

Yesterday was an absolutely monstrous one to be an investor in Facebook. In what will likely go down as a history-making day for the company, Facebook shares dropped a whopping 20% yesterday, equating to more than $100 bn of value lost. The huge losses were sparked by weaker than expected revenue growth as well as flat or falling user bases. That sent the stock down 7%. However, it was the guidance provided on a conference call that really spelled doom. The company’s CFO said that he expected weak revenue growth to continue, while costs were expected to rise 50-60% this year.

FINSUM: The big rise in costs is coming because Facebook is hiring 20,000 staff to increase cybersecurity. The need to do so does not bode well for the stock or the tech sector generally.

(New York)

The S&P 500 experienced a correction earlier this year, and since February, has been stuck in a rut. While the declines were not terribly deep, the doldrums were very long lasting. In fact, this was the longest correction (without a rebound or a fall into a bear market) since 1984. That meant the market was in correction for 115 straight sessions.

FINSUM: The market has finally regained some momentum, but it feels odd that stocks have been gaining in the face of largely negative trade war news. Then again, stocks love to climb a wall of worry.

(New York)

There have been a lot of fears about the junk bond market both over the last few years and in recent months. Many worry what a rising rate period would mean for the sector. However, the bigger worry might actually be a recession. Bank of America Merrill Lynch has recently put out a report analyzing the sector, and they highlight a potentially big worry. As many know, over the last decade, companies have gorged on BBB rated bonds (the lowest rung of investment grade), issuing trillions worth. However, the big risk is that in a recession, default rates will surge, profits will fall, and many of those bonds will be downgraded into junk status. When that occurs, many investments funds will be obligated to sell them because of mandates, which could cause a massive exodus and big losses.

FINSUM: The giant BBB market, which has been the superstar of the high yield sector since the Crisis, seems like it might be poised for a serious rough patch come the next recession.