Analysts said the reason is a combination of hedge funds taking profits and other investors jumping in as the price dips, and they expect volatility to last for several more days.
Stock in GM dropped as much as 45 cents to $33.81 as trading opened, but it rebounded to a gain, then continued to move in and out of positive territory. The drop late in the morning was similar to the broader market's decline of less than 1 per cent.
The stock movement comes just two business days after General Motors pulled off an IPO worth $15.8 billion, signalling the surprising resurrection of an American corporate icon that collapsed into bankruptcy protection and was rescued with a $50bn bail-out from US taxpayers.
Volatility will probably continue for at least a few more days because stock markets have been unstable of late and as hedge funds continue to take profits and other traders search for bargains, said Joe Phillippi, a former Wall Street analyst who is now president of AutoTrends Consulting.
He also said investors could be buying with the expectation of a pop in the price because GM should make its way back into the Standard and Poor's 500 index shortly. Membership in the index is important because many mutual funds buy shares based on it.
"The hedge funds are obviously big players. They're flipping. They used their muscle to get big strong allocations in the IPO," Phillippi said. "You may very well have a lot of portfolio managers buying the stock when it dips, figuring that it's going to be put back into the S&P 500 soon."
Phillippi said the large investment banks will do whatever it takes to keep the price above $33 and avoid triggering any computerised sell orders. Even though they cannot buy stock under Securities and Exchange Commission rules, they can legally talk to big investors and persuade them to buy, he said.