DETROIT – Shares of Ford Motor Co. (F) led auto stocks higher on Monday as the sector rallied on hopes that new U.S. vehicle sales in November will be better than pessimistic forecasts.
Shares of Ford rose 67 cents, or 6.56 percent, to close at $10.88 on the New York Stock Exchange, where they were among the day's most active issues.
"Ford is participating the most in the rally ... simply because it was beaten up the worst," said Scott Hill, an auto analyst with Sanford C. Bernstein in New York.
"It's just a recovery off of some massively overly pessimistic news," he added, referring to the battering Ford's shares took last month, when they dropped to a 10-year low of $6.90.
Shares of General Motors Corp. (GM), Ford's leading rival and the No. 1 U.S. automaker, rose $1.12, or 2.98 percent, to end at $38.70.
Other big gainers in late morning trade included automotive supplier Visteon Corp. (VC), whose shares closed up 36 cents, or 4.9 percent, at $7.70.
One industry source said automotive stocks were simply carrying the upbeat sentiment seen last Thursday, when Ford jumped $1.39. or 15.6 percent, to $10.32.
"Overall, it's the better-than-expected outlook for the industry," the source said.
A growing chorus of auto industry executives have predicted that November and December U.S. light vehicle sales will surpass the unexpectedly low seasonally adjusted annual rate of 15.4 million in October.
"Auto demand should start to recover over the next few months, helping build confidence in the outlook for 2003," Deutsche Bank analyst Rod Lache said in a research note. Nevertheless, Lache maintained a "cautious stance" on the U.S. automakers.
Bernstein's Hill said average new U.S. vehicle prices were edging higher in the fourth quarter, a sign that the market was stabilizing and that consumer demand remains healthy.
He noted that he owns no stocks and that Bernstein has no banking business with Ford or other auto companies.