General Motors' Recall Bonanza Continues to Get Worse
The Dow Jones Industrial Average is trading 140 points higher, or 0.86%, after Fed Chairwoman Janet Yellen took the stage to discuss economic conditions. While the Fed has reduced its monthly bond purchases from a high of $85 billion to $55 billion, Yellen stated multiple data points that show the economy isn't as strong as desired. Yellen noted that there are roughly 7 million people working part-time jobs who want full-time positions. She also spoke to the drop in the labor-force participation rate and the slower than desired rate of wage growth.
"For the many reasons I have noted today, I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy makers at the Fed," Janet Yellen said, according to Morningstar.
With that outlook in mind, here are some companies making headlines today.
For investors in America's largest automaker, General Motors , the news surrounding recent recalls continues to get worse. Late Friday General Motors announced two additional recalls, which brings the total number of cars recalled to 4.8 million over the last month. The newest recall is for nearly 500,000 late-model pickup trucks and SUVs that didn't have transmission oil cooling lines properly secured, which could cause leaks and possible fires. The second recall announced Friday covers 172,000 Chevrolet Cruze compact cars in which the right front axle shaft can fracture and separate while in use.
General Motors' CEO Mary Barra will appear tomorrow before a U.S. House committee to answer questions regarding the recall of 2.6 million small cars that were linked to at least 12 deaths caused by faulty ignition switches, which caused the cars to stall. The most obvious question that will likely fly at Mary Barra tomorrow will be why it took so long to recall these vehicles when indications are that the company knew about the issue as early as 2001. All eyes and ears will be on Barra tomorrow, and it's very possible things are about to get even worse for the automaker.
In other Detroit automaker news, Ford is investing $500 million in its Ohio engine plant, which will create 300 jobs. The jobs will help support production of the all-new 2.7-liter EcoBoost engine for the company's most profitable vehicle, the F-150.
"Our truck customers have spoken, and we continue to meet their evolving needs by providing another V6 option in the all-new 2015 F-150," said Joe Hinrichs, Ford president of the Americas. "The hardworking team at Lima Engine is thrilled to begin building one of the most technologically advanced engines ever designed for America's No. 1 truck."
Ford's F-Series is still easily on pace to be the best-selling vehicle in the U.S., and through the first two months of 2014 its biggest competitor, the Chevy Silverado, has posted a sales decline of 15%. Both companies will report March sales figures on Tuesday, and investors will be eyeing sales of the Silverado to see if a month-long push with steep incentives convinced consumers to drive incremental trucks out of dealer lots. If sales of the Silverado disappoint tomorrow it could mean a much rougher than expected first quarter for the folks at General Motors.
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The article General Motors' Recall Bonanza Continues to Get Worse originally appeared on Fool.com.Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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