Tuesday was a remarkable day on Wall Street. A huge disparity showed up in the market, with the Dow Jones Industrial Average (^DJI 0.62%) moving higher to new records while the S&P 500 (^GSPC 0.55%) eased lower and the Nasdaq Composite (^IXIC 0.63%) saw a sharper decline.

Index

Daily Percentage Change

Daily Point Change

Dow

+0.59%

+215

S&P 500

(0.06%)

(3)

Nasdaq

(1.33%)

(210)

Data source: Yahoo! Finance.

Market pundits were ready to attribute the division in the market to concerns about interest rates and monetary policy going forward. Yet there were strong enough moves in some key stocks to make some wonder if a broader shift toward out-of-favor companies was underway. In particular, the auto sector  seemed to turn upside down, with legacy players like Ford Motor (F 4.16%) and Toyota Motor (TM 1.90%) seeing some of the biggest gains.

The big automakers are back -- at least for a day

Leading the way higher for the auto industry was Ford, whose shares climbed almost 12%. The automaker has almost been dismissed for dead as Tesla (TSLA 2.99%) has climbed to more than 10 times its market capitalization, but Ford is finally coming to the fight and isn't pulling any punches.

Ford announced this morning that its F-150 Lightning electric pickup truck is moving to the final phase of pre-production, with vehicles coming off the assembly line to go through testing. The company plans to drive vehicles for thousands of miles to see whether they can stand up to the rigors of real-world driving while maintaining the durability that customers expect.

Ford F-150 Lightning towing heavy equipment in a residential neighborhood.

Image source: Ford.

In response to the heavy demand of more than 200,000 vehicle reservations from retail customers, Ford is also looking to double its F-150 Lightning production capacity at its facility in Dearborn, Michigan. That'll mean the electric version of the iconic pickup could see 150,000 vehicles per year produced once the move is complete. Moreover, similarly strong demand for the Mustang Mach-E all-electric SUV is prompting the company to boost overall capacity in the hopes of reaching annual production levels of 600,000 total battery electric vehicles within the next 24 months.

Strong sales to finish 2021

The other news moving auto stocks came from final sales numbers for 2021. Toyota climbed almost 7% as it surpassed General Motors (GM 2.25%) to become the top seller of vehicles in the U.S. market. The Japanese automaker sold 2.3 million vehicles, which was up 10% from pre-pandemic levels in 2019.

For its part, General Motors stock rose nearly 8%. That came despite the fact that full-year sales were down 13% to 2.2 million. The shortage of automotive semiconductor chips played a key role in limiting sales amid an extremely tight market for both new and used vehicles.

Just about every major legacy automaker now has serious plans to look at bulking up its electric vehicle (EV) offerings. Some investors will rightly say that they might be a decade later in doing so than they should be. But even with the late start, companies like Ford, GM, and Toyota have plenty of financial muscle, as well as the facilities and infrastructure, to accelerate production efforts more quickly than new start-ups lacking any manufacturing capacity at all.

The race is on

For a long time, legacy automakers didn't take EVs seriously. That has changed, and today's upward moves in their stock prices show that investors are hopeful that their longtime favorites can compete against their newer counterparts. That could be a theme that plays out not just in the auto industry, but across many parts of the economy in 2022.