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General Motors and Ford Rose as Sales Beat Expectations

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Jan. 5 2017, Published 8:37 a.m. ET

Consumer discretionary

The consumer discretionary sector rose 1.3% on January 4. Out of 12 industries in the consumer discretionary sector, the automobile industry provided the biggest support to the rally. General Motors Company (GM) and Ford Motor Company (F) were the top gainers in the consumer discretionary sector. General Motors and Ford Motors, which are major US multinational automakers, rose 5.5% and 4.6%, respectively, on January 4.

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Better-than-expected December sales figures pushed the two stocks higher. General Motors’ sales rose 10% year-over-year in December. It was better than the market’s expectation of 3.5%. In December, Ford Motors’ sales beat the market’s expectation of a 2.5% fall. Ford’s sales rose 0.3%. Read What Hurt General Motors Stock in December? for analysis of General Motors’ performance in December. Read Why Did Ford Stock Trade on a Negative Note Last Week? to learn more about Ford’s performance at the end of 2016.

Materials sector

The materials sector outperformed other major indices on January 4. It led the S&P 500 close to record highs. The S&P 500 materials sector rose 1.4% on Wednesday. Freeport-McMoRan (FCX) and Alcoa (AA) were the top performers in the materials sector. Freeport-McMoRan is one of the leading metals miners. It rose 7.6% on January 4. In 2015, Freeport’s performance was weaker amid weak copper, oil prices, and debt. However, Freeport staged a recovery in 2016 due to its aggressive debt reduction program.

Better demand prospects for copper in the US, India, and improved markets conditions for oil improved Freeport-McMoRan’s outlook. Asset sales to reduce the debt load also improved the sentiment. On December 30, Freeport declared the successful completion of its onshore California asset sale for $592 billion. In 2016, Freeport sold its assets and raised $6.6 billion. Read Freeport-McMoRan’s 2017 Outlook: Everything You Need to Know for Freeport’s 2017 outlook.

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