GM stock rises on its 2nd day

Associated Press

DETROIT

General Motors’ stock rose the second day it traded as it rebounded from an early swoon.

The automaker’s stock climbed 7 cents, or 0.2 percent, to close at $34.26 on Friday, one day after it began trading on Wall Street again, signaling the rebirth of an American corporate icon that collapsed into bankruptcy and was rescued with a $50 billion infusion from taxpayers.

As trading began Friday, GM’s stock dropped $1.08 to $33.11 as investors sold it to lock in profits. But buying returned and gradually lifted the stock until it passed Thursday’s closing price of $34.19 near the end of the day.

GM stock was traded more than 107 million times, less than one- quarter of the volume traded Thursday.

As the stock fell, bankers who managed GM’s initial public offering probably asked their larger investors to start buying so it wouldn’t fall below Thursday’s IPO price of $33 per share, said Peter Henning, a law professor at Wayne State University and former attorney with the U.S. Securities and Exchange Commission.

A drop below $33 could anger customers who were persuaded to buy the stock in the IPO. It’s also possible, Henning said, that investors who saw the price drop decided to buy, either for the first time or to increase their stakes.

SEC regulations stop the banks from buying shares on their own, Henning said.

Analysts said the initial sell-off likely was a combination of investors taking profits and people selling on fear that the price would drop even further.

Spokeswomen for GM and Morgan Stanley, one of the lead banks in the deal, would not comment on the day’s trading. A message was left for a spokeswoman from J.P. Morgan, the other lead bank.

There’s a lot riding on GM’s stock price in the coming months, especially for the U.S. government, which lent the automaker $50 billion to save it from financial ruin last year. In exchange, the government got a 61 percent stake in GM, and it hopes to get the bailout money back from the IPO and several follow-up sales that could take years.

GM, just 16 months out of bankruptcy protection, has made an impressive turnaround from losing billions before its restructuring to making $4.2 billion in profits in the first nine months of the year.

GM made a successful return to the New York Stock Exchange on Thursday, at least by some measures. After being priced at $33 a share in the IPO, it opened at $35. It ended the day up 3.6 percent, after trading as high as $35.99 in the first few minutes of trading. Almost 457 million GM shares traded, about one-tenth of all shares trading on the exchange.

The government and GM’s other owners sold 478 million common shares in the IPO, bringing in a total of $15.8 billion.

The federal treasury made $11.8 billion in the IPO by selling 358 million shares. It stands to make $13.6 billion — and lower its stake to 33 percent — if bankers exercise options for 54 million more shares.