Ford and Tesla lead surge in auto industry stocks

Article by Anita Panait, on July 12, 2013

Ford Motor Co. and Tesla Motors Inc. both achieved 100-week highs on July 9, 2013, Tuesday in what is one of the most recent signs that the auto industry in the United States is alive and kicking. Ford closed at $16.84 on Tuesday, lifted by a bullish auto market that is out to post its best year since 2007. Tesla, meanwhile, is joining the Nasdaq-100 Index, just three years since it started trading its shares.

Detroit 3 member General Motors Co., on the other hand, reentered the Standard & Poor's 500 Index in June 2013. The seven-member S&P 500 Automobiles & Components Index -- which includes GM, Ford and car parts-makers -- is the best performer among 24 industries in the S&P 500 in the last three months, growing 21 percent in the period.

These are just some tell-tale signs that these carmakers are increasingly gaining the confidence of the investing public. Investors are now starting to pour in their money to the revived US automotive industry, which four years faced financial troubles.

GM and Chrysler Group LLC had to undergo government-backed bankruptcies while Ford had to implement a self-financed restructuring. Matt Stover, an analyst with Guggenheim Securities, told Bloomberg that as autos become "bigger and bigger pieces of the indices," it receives greater attention from investors both focused on the auto industry and not.

He said that investors who were then indifferent to the auto sector saw the industry "moving, and now they're diving in." Demand for cars and trucks in the US has been outrageously high this year, boosted by a number of factors like pent-up need, historically low interest rates, and new compacts and family cars.

Topics: ford, tesla, sales

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