Thursday, May 03, 2007

The Satellite Radio Trader: Why the weakness today?

Tied at the hip when it comes to stock movement, Sirius and XM are both weak today. With a lack of industry specific news, the main reason I am hearing is the biased, fact-deprived Motley Fool article. But such a poorly conceived article doesn't move stocks. The more likely reason is tied to GM's earnings. Although auto sales were less than robust, the real weakness was due to their exposure to the housing market through their GMAC financing unit.

GM Posts 90% Decline in Net,Hurt By Loss at GMAC
By JOHN D. STOLL and MIKE BARRISMay 3, 2007 Wall Street Journal

General Motors Corp. on Thursday reported a 90% decline in first-quarter profit, as housing-market weakness weighed on the auto maker's overall results and the company's core North American operations continued losing money despite cost cuts.
GM executives said that problems in the residential mortgage business at GMAC Financial Services, in which the auto maker owns a 49% stake, were a major factor in GM's first-quarter performance, which fell well short of analysts' expectations.
GM shares were down 3.1% at $31.45 in early trading on the New York Stock Exchange...read more: here