This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

What the Dow Says About Car Sales

DETROIT ( TheStreet) -- When it comes to boosting August vehicle sales, Cash for Clunkers gets much of the credit, but the rise in the Dow Jones Industrial Average also played a role.

Continuing research by Jesse Toprak, vice president of industry trends for, shows that stock market performance is a major factor in determining whether consumers buy cars. Since January 2007, the two metrics have closely correlated more than 85% of the time.

In other words, when the Dow rises or declines from the previous month, auto sales rise or decline proportionally, in relation to the previous month's sales. The correlation reflects not just the direction of the changes, but also the quantity of the changes.

Through Tuesday, the Dow was up about 4%, and vehicle sales are surging, estimated to total more than a million. When the manufacturers report sales on Monday, it should be possible to extrapolate just how much of a role Cash for Clunkers played. Sales were rising even before Cash for Clunkers sales began in late July.

For obvious reasons, "the stock market has a huge impact on new vehicle sales," Toprak says. "Even if you don't have money in the market, the first thing you hear in the news is what happens in the Dow Jones index, and if you see a gleam there, it says things are good."

Toprak says the correlation has been particularly high since January 2007. Over the past decade, the correlation has been about 50% to 60%, he says.

-- Written by Ted Reed in Charlotte, N.C..

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 0.00%
FB $117.43 0.00%
GOOG $692.36 0.00%
TSLA $232.32 0.00%
YHOO $36.01 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs