Poor car sales put a brake on Wall Street trading
US stocks started the second quarter with a thud on Monday after carmakers reported disappointing March sales, a possible warning about other types of spending.
But a late recovery helped stocks avoid bigger losses.
Stocks tumbled in morning trading after carmakers including Ford and General Motors said passenger car sales slumped last month.
Car parts and rental car companies also tumbled.
Spending by shoppers is a critical part of economic growth and investors found themselves wondering if spending will keep growing as it has in recent years.
Small companies slumped, as their performance is closely linked to US economic growth.
While stocks recovered most of their earlier losses, the weak car sales still sent a chill through the market.
Steven Ricchiuto, chief US economist for Mizuho, said car sales have been a major part of the US economy recently, and if car sales fall, consumer spending would also weaken.
That in turn might mean manufacturers and other companies won't open as many factories or hire as many workers.
"If we're starting to lose some of the momentum on cars, where is the momentum going to come from?" he said.
The Standard & Poor's 500 index fell as much as 18 points around midday, but finished down just 3.88 points, or 0.2%, at 2,358.84.
The Dow Jones industrial average lost as much as 145 points but wound up with a loss of 13.01 points, or 0.1%, to 20,650.21. The Nasdaq composite shed 17.06 points, or 0.3%, to 5,894.68.
The Russell 2000 index of small-company stocks gave up 16.25 points, or 1.2%, to 1,369.67.
Ford, Fiat Chrysler, Toyota and Honda all said their overall sales decreased in March as passenger car sales kept falling.
GM reported its sales were up thanks to stronger SUV sales, but its totals were not as good as experts expected.
Car sales have reached all-time highs in recent years, but companies are offering more cash, incentives, and low-interest loans to draw in buyers.
Investors are getting worried that companies will be stuck with vehicles they will have to sell for big discounts.
Fiat Chrysler lost 52 cents, or 4.8%, to 10.41 dollars and General Motors stock fell 1.19 dollars, or 3.4%, to 34.17 dollars. Ford gave up 20 cents, or 1.7%, to 11.44 dollars.
Five of the eight worst performers in the S&P 500 Monday came from the car industry.
Car parts retailer O'Reilly Automotive dropped 11.15 dollars, or 4.1%, to 258.69 dollars.
Car retailer AutoNation shed 1.45 dollars, or 3.1%, to 40.84 dollars and Goodyear Tire slid 73 cents, or 2%, to 35.28 dollars.
Tesla said over the weekend that its deliveries jumped 69% in the first quarter to a record 25,000.
The electric car company's stock climbed 20.22 dollars, or 7.3%, to 298.52 dollars. Tesla's market capitalisation rose to 48.7 billion dollars, greater than Ford's.
Bond prices rose sharply.
The yield on the 10-year Treasury note fell to 2.33 percent from 2.39%. When bond yields fall, interest rates also decrease, and that affected banks and financial institutions.
As investors felt less certain about the performance of the economy, they sold stocks in companies that do the best when the economy is growing quickly.
Retailers, technology companies, and industrial companies fell more than the rest of the market on Monday.
The dollar sank to 110.96 yen from 111.29 yen and the euro fell to 1.0665 dollars from 1.0684 dollars.
Benchmark U.S. crude lost 36 cents to 50.24 dollars a barrel in New York. Brent crude, used to price international oils, slipped 41 cents to 53.12 dollars a barrel in London.
Health care companies finished with small gains as big health insurers traded higher.
Cigna added 2.90 dollars, or 2%, to 149.39 dollars and Humana picked up 3.63 dollars, or 1.8%, to 209.77 dollars. Aetna and UnitedHealth both rose about 1%.
Novocure jumped after a study of its Optune device, which uses electric fields to fight cancer, appeared to improve survival for patients with aggressive brain tumours.
Over the weekend the company said 13% of patients treated with the device as well as chemotherapy were still alive after five years, compared to 5% for the patients who received only chemotherapy.
Many doctors are sceptical of the product, and it is costly, at 21,000 dollars a month. Novocure stock climbed three dollars, or 37 percent, to 11.10 dollars.
In other energy trading, wholesale petrol fell one cent to 1.69 dollars a gallon. Heating oil slid one cent to 1.56 dollars a gallon. Natural gas skidded six cents, or 1.9%, to 3.13 dollars per 1,000 cubic feet.
The price of gold rose 2.80 dollars to 1,254 dollars an ounce. Silver lost four cents to 18.21 dollars an ounce. Copper dropped five cents, or 1.8%, to 2.60 dollars a pound.
France's Cac 40 slipped 0.7%.
The German Dax sank 0.5%, as did the FTSE 100.
Japan's benchmark Nikkei 225 added 0.4% and the Kospi in South Korea rose 0.3%. Hong Kong's Hang Seng gained 0.5%.