S&P 100 Drops GM, Dow Jones Next?
The S&P 100 is the most widely watched index of large-cap US stocks. It's a bellwether for the U.S. economy, a vital component of the Index of Leading Indicators. Reuters reports that the index's managers have punted GM, replacing it with Mastercard. "S&P did not in a statement explain why it dropped GM from the S&P 100." The fact that the automaker's share price has recently slid to 50-year lows, and the international automaker's market cap has fallen from $56b in 2000 to around $5.6b (which means GM NA has a negative net worth), might have had something to do with it. Informed speculation about an impending GM bankruptcy certainly came into play. And now all the index funds that buy the basket of S&P 100 stocks will have to sell their GM and buy Mastercard– no matter what the current price. The news should drag GM's stock price even lower. It's only a matter of time– and not much of it– before the DJIA (Dow Jones Industrial Average) will have to take a hard look at GM's inclusion. If/when, GM gets kicked off that listing, raising money to feed the automaker's cash conflagration will get a lot harder. Leaving federal loan guarantees as GM's only recourse to stave-off Chapter 11. All this before July's sales number and GM's first quarter results. Dark days ahead.
More by Robert Farago
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glad you liked it, wish GM execs would see the light.
menno Says: July 11th, 2008 at 12:32 pm "They maintain jobs banks where employees are given FULL pay to stay home and not work." ============================================= I've read this and seen this several times before. My question is ..How many? How many employees are or were in the jobs bank and how long were they there? How much of this companies losses can be attributed to the Jobs bank program? I'm not advocating this but just curious what the actual costs are. It's easy to point to one area and make scapegoats out of it but if the reality is it's a small link to a large chain then it should be put into proper perspective.
Buickman Says: July 11th, 2008 at 10:42 pm Buickman, Thanks for the link to your site and thanks for the insightful thoughts. Good luck to you in your quest to change GM. In light of what's happening to that company it's obvious they need to make top level changes.
I don't blame the workers at all. They know enough to ask for some of the $$ that GM is offering every time their contract comes up. It's the same as yelling at my dog for being smart enough to sit near my daughter's chair at meal time. The dog, and the workers, know where the best morsels are. Nope, I blame the management. Too big a company, too many fiefdoms, too many actuarial cooks spoiling a broth that was rancid in the late 80's. I do actually hope they emerge. I look forward to owning a Cadillac some day, when I take up golf and finally buy a car with an automatic transmission.