Why General Motors shares are falling
General Motors shares took a hit on Wednesday even after the company reported quarterly results that surpassed analysts’ expectations. Driving the collapse was the company’s cut to its profit outlook for the year, citing higher steel and aluminum costs and South American currency headwinds.
General Motors’ shares were down over 7% Wednesday afternoon and on track to post their largest daily percentage decrease since Nov. 9, 2011 when they fell 10.9%. Depending on how the afternoon goes, shares could close at their lowest price since May 9, 2018, when they finished at $36.27.
Shares are down over 10% year to date. For comparison, the S&P 500 is up almost 6%.
Rival automaker Fiat Chrysler also cut its outlook for the year when it released its results Wednesday morning.
President Trump has placed tariffs on steel and aluminum imports, and companies anticipate that this will drive up the prices of the raw materials.
Trump is meeting with European Commission President Jean-Claude Juncker Wednesday, and tariffs are anticipated to dominate the discussion. Trump has threatened tariffs on U.S. car imports from Europe, and Europe has threatened to retaliate.
Larry Kudlow, a top economic adviser to Trump is positive on the potential that a decision that avoids a trade war will be made when the president meets with Juncker.
“They have a positive attitude going into this. Our team has a positive attitude,” Kudlow said on Fox News’ “Fox & Friends” Wednesday morning. He also called the meeting “absolutely crucial.”