General Motors Shares Rally As Falling Crude Boosts Outlook For Auto Demand

General Motors Co (NYSE:GM) shares are trading higher Monday afternoon after oil prices plunged following President Donald Trump's announcement of a five-day pause on U.S. strikes against Iranian energy infrastructure, easing fears of a deeper energy shock and improving the outlook for automakers. Here's what investors need to know. General Motors stock is among today’s top performers. Why are GM shares rallying? Falling Oil Prices Could Support GM Demand GM stock appears to be benefiting from the sharp drop in crude because lower oil prices can directly improve consumer affordability and sentiment around vehicle purchases. West Texas Intermediate crude fell more than 8% to about $90.10 a barrel, while Brent dropped nearly 8% to roughly $103.31 after Trump said the U.S. had held "very good and productive conversations" with Tehran and would postpone attacks on Iranian energy assets for five days, pending further discussions. Lower Fuel Costs May Improve Vehicle Affordability That backdrop is potentially supportive for GM for a few reasons. First, falling fuel prices can reduce pressure on household budgets, which may make consumers more comfortable taking on large-ticket purchases such as new vehicles. Second, lower gasoline prices can improve driving-cost perceptions, helping support demand across GM's broad portfolio of trucks, SUVs and crossovers. Third, easing energy-driven inflation fears can strengthen expectations for auto financing conditions and overall demand trends. De-Escalation May Lift Sentiment Around GM Earnings Power Investors may also see the de-escalation as reducing macro uncertainty tied to supply disruptions through the Strait of Hormuz, a key global oil chokepoint. For GM, that kind of relief can translate into a more constructive demand outlook and better sentiment around the automaker's earnings power. GM RSI Nears Oversold Territory After Recent Weakness GM's RSI has mostly fluctuated in the neutral range over the past year, with periodic spikes into overbought territory above 70 and brief dips toward oversold levels near 30. Recently, RSI has trended lower toward the mid-30s to low-40s range, suggesting weakening momentum but not yet a deeply oversold condition. GM Earnings Set for April 28 As Investors Eye Outlook Looking further out, the next major catalyst for the stock arrives with the April 28 earnings report. EPS Estimate: $2.60 (Down from $2.78 year-over-year) Revenue Estimate: $43.70 billion (Down from $44.02 billion YoY) Valuation: P/E of 22.3x (Suggests fair valuation relative to peers) Analyst Consensus On GM Stock and Recent Price Target Changes Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $92.42. Recent analyst moves include: Benchmark: Buy (Raises Target to $90 on Feb. 10) Jefferies: Hold (Raises Target to $97 on Feb. 2) Evercore ISI Group: Outperform (Raises Target to $95 on Feb. 2) GM Shares Climb Monday Afternoon GM Price Action: General Motors shares closed Monday up 4% at $75.72, according to Benzinga Pro data. Image: Shutterstock