GM Rejoining S&P 500
Barely four years after emerging from a bankruptcy some thought it might not survive, General Motors is once again being seen as a barometer of the American economy, the maker rejoining the S&P 500, a key stock market index, after the New York Stock Exchange wrapped up June 6 trading.
GM replaced H.J. Heinz Co. on the S&P 500, according to the S&P Dow Jones Indices. It comes as the latest in a series of endorsements for the Detroit maker, including recent debt ratings upgrades, and follows a series of strong earnings reports and U.S. sales gains.
The move is expected to help further boost the share price of GM which has already experienced a more than 25 percent gain since early April. But it’s by no means alone. Cross-town rival Ford Motor Co. has jumped by an even greater margin in recent months, as has Fiat S.p.A., the Italian automaker that now owns a controlling stake in Detroit-based Chrysler Group LLC.
GM isn’t the only company regaining a seat on the S&P 500. It will be accompanied by AIG, the giant financial firm that also struggled to stay afloat during the depths of the recent recession. AIG will replace Baker Hughes, Inc. on the closely watched index.
It took $182 billion of a highly controversial bailout fund known as TARP to keep AIG afloat. By comparison, GM received a relatively modest $50 billion from the U.S. Treasury. The automaker’s bailout is expected to result in a loss to taxpayers that could exceed $10 billion depending upon just how high the government’s remaining shares climb in value.
The White House has said it expects to sell off its remaining GM holdings by April of 2014.
