As you know, the International Longshoremen Association is on strike right now. This has caused many investors to wonder what the impact will be on their portfolios.
I often try to find charts or data about current events and how similar events in history have impacted the stock market. In this case I turned to a new(ish) tool - Chat GPT. I asked Chat about recent labor strikes and how they've impacted the market. Here's what it found:
1. Writers Guild of America (WGA) Strike (2023)
Stock Impact: The entertainment sector, particularly companies reliant on film and television production like Disney, Netflix, and Warner Bros., saw their stocks fluctuate due to halted production. During the 2023 strike, companies had to halt filming and release schedules, which led to temporary stock declines. However, these losses were offset by strong performance in other parts of their business (e.g., streaming, parks, or gaming).
Broader Market: The S&P 500 and other broad indexes remained relatively stable, as the entertainment industry, while significant, didn’t have enough weight to sway overall market trends during the strike.
2. United Auto Workers (UAW) Strike (2023)
Stock Impact: Shares of Ford, General Motors, and Stellantis saw declines when the UAW strike began in September 2023, as the potential for reduced vehicle production spooked investors. However, the broader stock market (e.g., the S&P 500) was relatively unaffected, as the strike mainly hit the auto sector. Automaker stocks tend to recover after these strikes, especially if production resumes quickly and supply issues are resolved.
Broader Market: Despite the strike’s impact on auto stocks, the broader market remained resilient, buoyed by strength in other sectors like technology and services.
3. Amazon Warehouse Workers Strike (2021)
Stock Impact: Amazon’s stock showed resilience despite unionization efforts and labor strikes. The company’s significant market power and diversification into cloud computing (AWS) helped shield it from significant investor worry. Amazon shares were generally buoyed by the overall growth in e-commerce, despite the labor unrest.
Broader Market: Given Amazon’s influence on the broader market, any disruptions could have potentially affected larger indexes, but AWS performance and general market conditions helped offset the strike's effects.
4. John Deere Strike (2021)
Stock Impact: John Deere’s stock dipped initially due to production disruptions but quickly rebounded after the strike ended, as investors anticipated that demand for agricultural equipment would remain strong. The stock’s long-term performance was not significantly hurt by the strike, showing resilience as operations resumed.
Broader Market: The impact on broader market indexes was minimal, as John Deere does not have enough market capitalization to heavily influence major indexes like the S&P 500.
5. Kellogg’s Workers Strike (2021)
Stock Impact: Kellogg’s stock saw slight declines during the strike, as production slowed, but the effect was short-term. Once the strike was resolved and a new contract was signed, the stock rebounded.
Broader Market: The broader market was largely unaffected by the Kellogg’s strike, as it was limited to a specific sector and company.
In all of these recent cases the disputes have been resolved and the companies/industries have gotten back to work finding ways to earn profits and give returns to their shareholders. I'm not saying labor disputes don't have an impact on stock price, they definitely do, but the effect is usually only in the short-term and doesn't have too much of a long term impact.
You may be saying 'this time is different'. You're right. The crises of the day is always different. This labor strike is different. The AI boom is different. Inflation is different than before. The COVID pandemic was different. Automation is different.
The US and businesses are always innovating, creating new issues that we must solve. The one constant through all of these is that we figure out a way to work through the differences and come through the difficulty stronger, and this ILA strike will be no different in that regard.
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