Associated Press
GM shares retreat after Congress idles deal
Associated Press, 11.20.08, 05:04 PM EST
Shares of General Motors Corp. gave back most of their gains following a wild day of trading Thursday, after lawmakers put the brakes on a proposed bailout of the auto industry and demanded that the automakers develop a plan to show that the money would make them economically viable.
Democratic leaders said Congress would return to work in early December to vote on legislation if General Motors Corp., Ford Motor Co. and Chrysler LLC produce an acceptable plan.
Detroit-based GM's shares managed to end the day up 9 cents, or 3.2 percent, at $2.88 and was the only Dow Jones industrials component to finish in positive territory.
Early in the day, when it appeared the proposed bailout was destined for failure, GM's shares tumbled as low as $1.70. That marked their lowest price since June 4, 1938, when they fell to $1.69, according to the Center for Research in Security Prices at the University of Chicago.
The price is adjusted for splits and other changes.
But mid-afternoon news that Democrats and Republicans from auto industry states had reached a deal on an alternative assistance package sent GM shares soaring to $4 before retreating after lawmakers said the help was on hold.
Shares of Ford Motor Co. followed a similar path, ending the day up 13 cents, or 10 percent, at $1.39.
In morning trading, the Dearborn, Mich.-based automaker's shares had sank to $1.01, matching a low set on Aug. 19, 1982, before peaking at $1.87 in the afternoon.
Efraim Levy, an analyst for Standard & Poor's Equity Research, earlier Thursday backed his "Sell" rating for GM's shares, but said he expects the automakers to get some kind of government help.
"While the program we expect is not a panacea, we believe that, with the current fragile economy, the government should not risk further disruption from a ripple effect from the failure of a major automaker, as the economic costs could then be greater than the aid," Levy wrote in a note to investors.
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