GM Stock Rises As General Motors, UAW Reach Tentative Labor Deal | Investor's Business Daily
General Motors ( GM) and the United Auto Workers have reached a tentative deal on a new labor contract that could end the costly, monthlong GM strike, the union confirmed. GM stock rose Wednesday.
Terms of the deal, including when the work stoppage would end, were not immediately available. But the agreement is expected to include raises and bonuses for roughly 48,000 workers, new investments in manufacturing plants and new hourly jobs.
General Motors will reportedly give all temp workers the opportunity to become full-time workers after three years of service. The reported deal comes a day after GM CEO Mary Barra met UAW leadership for the first time at the bargaining table.
"Out of respect for our members, we will refrain from commenting on the details until the UAW GM leaders gather together and receive all details," the UAW said on its website Wednesday. Union negotiators are sending the proposed deal to UAW's GM National Council, recommending acceptance due to the "major gains" for auto workers.
The strike is the longest strike against an automaker in two decades and the longest against GM since 1970. The strike continues for now, and the UAW said the union's GM National Council will meet and review details on Thursday, when they will vote on whether to recommend the deal to the full UAW-GM membership for ratification.
The new labor contract, if ratified, could serve as a template for negotiations with Ford Motor ( F) and Fiat Chrysler ( FCAU). The monthlong GM strike was estimated by Bank of America analysts to have cost the top U.S. automaker as much as $2 billion.
GM stock rose 2.4% to 37.15 on the stock market today, testing the 50-day moving average. Shares undercut that level Sept. 16, the day the GM strike began. The relative strength line is lagging. The RS line, tracking GM stock's performance against the S&P 500, is shown in blue in the chart provided.
Ford stock rose 0.8% Wednesday. FCAU stock added 1.4%. GM reports earnings for the third quarter on Oct. 29.
"A prolonged strike could burn significant cash and bring GM to its knees, but investors likely will also react negatively if management is perceived to have caved in to labor's demands and GM's long-term competitiveness is threatened," analyst John Murphy wrote in a note to clients Tuesday.
A day earlier, Morgan Stanley analyst Adam Jonas wrote investors are OK with an extended GM strike despite the potential multibillion-dollar cost. "We don't sense capitulation among investors as long as 2020 forecasts remain intact," he said.
Find Aparna Narayanan on Twitter at @IBD_ANarayanan.YOU MIGHT ALSO LIKE: Is Tesla Stock A Buy Right Now? Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks Looking For The Best Stocks To Buy And Watch? Start Here IBD Stock Of The Day Find The Latest Stocks Hitting Buy Zones With MarketSmith
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