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Ford and GM rev up after earnings

October 31, 2012: 1:12 PM ET

Both Ford and GM posted stronger-than-expected earnings, despite a drag on European sales.

Ford and GM rallied Wednesday after both automakers topped third-quarter earnings forecasts, despite soaring losses in Europe.

Shares of Ford (F) climbed more than 5%, as the company's record profit of $2.3 billion in North America helped offset its $468 million loss in Europe, bringing losses in Europe so far this year to just over $1 billion.

Meanwhile, General Motors (GM), the largest U.S. automaker, reported a third-quarter profit that trounced analysts' estimates. Though profits fell sharply in Europe and North America for GM, its international unit, which includes operations in China, improved. In fact, GM once again sold more cars and trucks in China than in the United States in the period.

StockTwits traders remain fairly bullish on the Detroit automakers even though Europe remains a mess.

TwoSmuth: Any head count reductions in Europe = bullish RT @Opinterest$GM Announces 2,600 Headcount Reduction in Europe // #ratsfleesinkingships

In an effort to stem the losses in Europe, Ford said it would close three plants and cut 6,200 jobs Europe by 2014. But it also warned it would not be profitable there until the middle of the decade.

ToddSullivan: GM, Ford say sales will be pinched IMO in Q4 yes....but lots of cars wrecked for Q1/2 buys $F $GM

ValueOnly: $F's earnings are great despite Europe. Market has yet to notice Ford's earnings generate zero cash taxes. Great cash flow, momentum. Bullish

Even hedge fund manager Doug Kass, known for successful short selling ideas, is bullish on Ford and GM.

DougKass: My largest ind. exposure is in the carmakers - F and GM. 3Q EPS (especially domestic profits) reported yesterday and today support thesis. $F

DRLamar: Euro profit mid decade = brand, product & operating efficiencies. BELIEVE! US snappin up F trucks. Warriors need horses $F That was corny.

macroQmicro: Made in America! Ford has best-ever 3rd quarter results as North America picks up slack Europe $F

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Hibah Yousuf
Hibah Yousuf
Reporter, CNNMoney

Hibah Yousuf is a reporter at CNNMoney, where she covers stocks, bonds, commodities and currencies trading across the globe, as well as corporate earnings and other markets-related news. Prior to joining the site in 2009, she interned at Money Magazine.

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