Ally Financial Loses Momentum as Auto Sales Sputter

Online bank and investment company Ally Financial (NYSE: ALLY) seen its stock do well so far in 2019, rising 40% and significantly outpacing broader benchmarks of stocks in the consumer finance industry. This year's gain for Ally marks a significant turnaround from last year's 22% drop, when the bank struggled with declines in its automotive lending and insurance businesses.

However, after hitting a record high in September, investor sentiment toward Ally shifted, falling as much as 15%. Ally hasn't regained that prior peak even as the broader market rallied to new records. The reason has to do with the aspects of the economy that affect Ally's business the most.

Many investors have looked at the trade dispute between the U.S. and China as a primary worry for the market as a whole. But the bigger concerns for Ally investors has to do with consumer sentiment and credit conditions that affect demand for big-ticket purchases like cars -- the biggest driver of Ally's lending activity. While the company has diversified into home lending, corporate finance and asset management, Ally still generates about 70% of its revenue from car loans as the successor to GMAC, the former automotive financing arm of General Motors (NYSE: GM).

Source Fool.com