Shares of industrial and transportation companies have experienced a sharp decline due to ongoing auto maker strikes and concerns over wage inflation. Despite General Motors' announcement of a 21% increase in third-quarter vehicle sales, their shares have still plummeted. This can be attributed to the current strike by the United Auto Workers, which poses a threat to sales and may result in higher wage bills for GM, Ford Motor, and Stellantis.
In the midst of these developments, Stellantis's U.S. division, responsible for brands such as Jeep, Ram, and Chrysler, observed a slight decline in sales for the quarter. Ford is yet to report its sales, with Wednesday being the day for their announcement.
Moreover, the strike has had unfortunate repercussions, leading both Ford and GM to lay off an additional 500 employees. These layoffs are a consequence of the strike's knock-on effects.
Apart from the impact of the strikes, concerns about a potential government shutdown have also influenced the sector. The perceived vulnerability of House Speaker Kevin McCarthy's position has increased these apprehensions. It is worth noting that following a historic vote, Mr. McCarthy was ultimately ousted after the market closed.
Despite these challenges, there are still pockets of strength in the industrial side of the economy. Eric Marshall, president of Dallas mutual-fund firm Hodges Capital, highlighted ongoing spending at the government level on infrastructure projects as a contributing factor to this resilience.
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