What Hurt General Motors Stock in December?



Gains in 2016

In 2016, General Motors (GM) delivered 2.4% positive returns. It was much lower than 9.5% positive returns by the S&P 500 Index (SPY). At the same time, General Motors’ 2016 performance was still far better than its direct peers including Ford (F), Toyota (TM), and Fiat Chrysler (FCAU). Now, let’s take a look at how General Motors stock performed in December. We’ll find out what might have limited its gains for the month.

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Weakness in December

In the week ending December 30, 2016, General Motors stock continued to trade on a negative note and closed at $34.84 with a -2.4% return for the week. With this, the stock ended December on a mixed note with 0.9% gains. General Motors’ move to temporarily close its production facilities, planned layoffs, and broader market weakness during the week could be why there was pessimism on Wall Street.

Note that General Motors plans to temporarily shut five of its production facilities in the US in January 2017. It wants to lower its car inventory level that grew in 2016. According to a Reuters report, the company plans to bring down the supply of new vehicles to 70 days from 84 days reported at the end of November 2016. The report also suggested that in March 2017, General Motors “will lay off about 1,300 plant workers and cut the second shift at its Detroit-Hamtramck plant.”

Technical update

An immediate horizontal resistance is near $35.80 followed by a stiff resistance level near $36.90. Only a breach of the immediate resistance at $35.95 could attract fresh buying in the stock and take it up more. On the downside, a minor support is near $34.10.

To learn about General Motors’ key highlights in 2016 and its growth in the first three quarters of 2016, read Your General Motors 2016 Holiday Highlights.

In the next part, we’ll discuss Ford’s key technical support and resistance levels for this week.


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