General Motors (GM) Shares Rally 9% on May 18: Here's Why
General Motors Company’s GM shares rallied 9.63% yesterday to close the session at $24.81. Resumption of manufacturing operations after a two-month shutdown led to this rally. The company reopened several U.S. factories, including truck plants in Michigan and Indiana on Monday that had been idled since mid-March due to the coronavirus outbreak.
The factories will be running on one shift this week, as it is not yet clear what will be the likely demand for new vehicles in the coming months. While the firm’s first priority is to bring pick-up trucks to its dealers to avoid tight supplies as America reopens, it also plans to reopen its third pick-up factory in Mexico later this week. General Motors expects to bring in the second shift next week if it effectively prevents virus contamination at reopened factories, and if customers resume buying vehicles amid coronavirus concerns.
Apart from General Motors, shares of Ford F and Fiat Chrysler FCAU also gained around 8% yesterday as the companies resumed production in their U.S. plants. Per Fiat Chrysler and General Motors, 12,000 employees for each returned to work on Monday. Automakers like, Toyota TM, Honda and Tesla began reopening plants last week and Hyundai restarted a plant in Alabama on May 4.
General Motors currently a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
To keep workers safe, the automakers have rolled out policies which include keeping the staff at least 6 feet apart, sanitizing work areas and tracking employee temperature regularly. The companies have also installed plastic screens or partitions along assembly lines to isolate staff, redesigned workspaces for less encounters and made wearing face masks or shields compulsory. Moreover, the automakers have revamped their lunch and break areas, developed new procedures for entering and exiting the facilities, and arranged testing protocols for coronavirus suspects.
The reopening of plants is being closely monitored by other industries as well as government officials as a test of whether social distancing and coronavirus safety protocols for densely populated work areas such as assembly plants can successfully reopen without a resurgence of the pandemic.
Several industries as well as government officials are closely monitoring the reopening of plants to test whether social distancing and safety protocols are actually preventing the spread of coronavirus.
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