The Daily Dow
FOOL GLOBAL WIRE
by Robert Sheard (TMF Sheard)
LEXINGTON, KY. (May 13, 1997) -- Despite slowing retail sales (another
piece of the economic pie that will help the Fed determine interest rates),
the market just didn't have enough oomph left after yesterday's 123-point
rally to go anywhere. Up a bit, down a bit, all in all, a do-nothing kind
of session.
Under the surface of the calm market, though, there were some interesting
currents of news affecting new or recent Foolish Four stocks. GOODYEAR
TIRE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GT)") else Response.Write("(NYSE: GT)") end if %> just settled a 19-day strike, good news. But the company
announced this morning that the strike cost the company some $50 million
in lost production.
As a result, the company said it would miss the Wall Street expectations
for the second quarter. Last year, Goodyear earned $1.22 per share and First
Call's consensus estimate for this year's second quarter was $1.28. Interestingly
enough, the stock gained 1% today. Whether the market had already accounted
for the strike is hard to tell, but investors shrugged the report off.
In other Dow strike news, GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> is now suffering
a third strike. About 8,500 workers at a GM subsidiary which makes electric
wiring for twenty auto makers worldwide walked off the job today. At issue
in this strike are local pension and pay rates with Delphi Packard Electric
Systems.
This makes the third strike against GM, with two different unions. I'm not
making any predictions here, but this sounds like a classic "Dog." The news
is very public and no one wants the stock. Often, by the time everyone has
heard the bad news, the effect has long been factored into the stock price.
We'll see how this plays out over the next twelve to eighteen months for
the nation's largest auto maker.
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