 | MONEY
|
| HOME | PRICE GUIDE | BUSINESS | SPORTS | OPINION | SPECIALS | STORE | ARCHIVES | CONTACT |
|
|
GM's Demise a Boost for Stocks - Money Matters for 11/21/05
Out with the old, as the saying goes...
General Motors, a company beset with expensive employee benefit costs, announced a major restructuring today which will permanently close the doors on 12 North American facilities and put 30,000 people out of work by 2008. That's the good news.
The bad news is that GM is still a hugely unprofitable company with many more problems in front of it. Shaving 30,000 jobs from the workforce may be a good start, but building cars that can compete with the likes of the Japanese automakers would be even better, and that's not about to happen.
GM has been building oversized minivans, trucks and SUVs for more than a decade while the price of fueling these monstrosities has risen dramatically. In the meantime, Japan and other foreign firms have been eating their cake with nimbler, smaller, more sensible (and fuel efficient) autos. The giant of American automaking has a lot of downsizing still to do.
While the market was generally buoyant, investors sent GM shares lower by nearly half a buck. The stock is stuck in the low to mid 20s and as an investment is best avoided. Face it. American manufacturing is just about dead.
In the meantime, the major indices ramped up to some of their best levels of the year. The Nasdaq and NYSE Composite are both within 3 points of their 52-week highs, while the Dow has another 207 points to reach the high mark.
Besides the GM news, most of the attention was focused on the Conference Board's Index of Leading Economic Indicators, which rose 0.9 percent in October after a precipitous decline in September, which was mostly tied to hurricanes Katrina and Rita.
The leading indicators forecast moderate growth, and they are generally reliable, being that the Conference Board is NOT a government agency, so their figures are usually not smudged, fudged or nudged.
Add to the fact that November and December have been generally excellent months for the stock markets over the past decade and you have the makings of a real rally with legs.
Approaching the 52-week highs does, however, suggest a bit of caution. The economy is growing, but slowly, and stock prices are lofty. A correction could come at any time, though if it does, it would be slight. For now, it seems that everything is pretty rosy for American business... what's left of it. The next five weeks of trading could be largely profitable if you're in the right stocks.
Dow Jones: +53.95; 10,820.28 close
NYSE Advancers: 2055
Nasdaq Advancers: 1893
NYSE New Highs: 229
Nasdaq New Highs: 212
Gold: +3.30; 489.50 close
|
|
