GM, Ford Burn Rubber
Updated from 9:30 a.m. EDT
Investors piled into U.S. auto stocks on Thursday as successful contract negotiations with the United Auto Workers union sparked a wave of optimism about Detroit's prospects on Wall Street.
Shares of General Motors (GM) broke the $40-mark for the first time in three years before pulling back slightly. Shares were up $1.85, or 4.9%, to $39.98.
Ford (F) were also rallying, up 39 cents, or 4.7%, to $8.62.Is this wave a sign of the tide turning for the beleaguered U.S. automakers, or is it bound to crash into the rocky shoals of continued sales declines in North America? "A whole lot of optimism built up in September around these labor negotiations, and now that they're wrapping up with these agreements, we're seeing the result in these stock moves," says Calyon Securities analyst Mark Warnsman. "I'm not convinced that the adverse fundamentals have really changed. They still have to make better cars that people will buy." The stocks' move came after Chrysler, which was recently taken private by Cerberus Capital Management, announced that it reached a tentative agreement on a new four-year labor contract with the UAW. The deal ended a six-hour labor strike against the company. GM reached its own agreement with the union two weeks ago after a two-day strike, and its UAW workers voted in favor of ratifying the agreement on Wednesday, with 60% of the votes cast in support.
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