GM, Chrysler say slashing dealerships necessary
WASHINGTON (AP) -- The
chiefs of General Motors and Chrysler told skeptical lawmakers on Wednesday
they have too many dealers to support their slimmed down operations and
sacrifices must be shared as they fight to overcome bankruptcy and survive.
They acknowledged that slashing dealerships is causing pain in communities
around the country.
Committee Chairman Jay
Rockefeller, D-W.Va., suggested both companies were abandoning customers and
dealers, some of whose families have been in the business for decades.
More than 2,700 dealerships
are in line to lose their franchise. Two small-town dealers invited to appear
before the committee spoke of the anguish ahead.
Economic data disappoint,
indicate slow recovery
WASHINGTON (AP) -- A pair of
economic reports on Wednesday indicated only slight improvement in the service
and manufacturing sectors, suggesting that any economic recovery will be
gradual.
The nation's service sector
shrank in May at the slowest pace since late last year. And factory orders rose
in April. But the improvements fell short of economists' expectations and
disappointed investors, who sent stocks lower.
Economic reports earlier
this week on home sales and manufacturing had been encouraging, but Wednesday's
figures sent a reminder that the economy remains sluggish.
Worse-than-expected economic
data thwarts rally
NEW YORK (AP) -- Investors
broke the stock market's four-day rally and sold off after data on the services
industry and factory orders came in below forecasts.
The Dow Jones industrial
average fell almost 66 points, or 0.8 percent, to 8,675.24, while the Standard
& Poor's 500 index fell 1.4 percent. The Nasdaq composite index, which has
been outperforming the other indicators this year, fell just 0.6 percent.
Optimism about the economy
stabilizing has lifted the Dow 32.5 percent from its 12-year low reached in
early March. Over those three months, topping investors' expectations meant
clearing a relatively low bar.
Bernanke: Start work now to
curb budget deficit
WASHINGTON (AP) -- Federal
Reserve Chairman Ben Bernanke on Wednesday urged Congress and the
administration to cut record-high budget deficits, warning that they could
erode investor confidence and endanger the economy's long-term health.
Bernanke's comments came as
concerns grow at home and overseas about the United States' mounting red ink.
The White House estimates
that the government will rack up an unprecedented $1.8 trillion budget deficit
this year. That would be more than four times last year's all-time high.
Bernanke acknowledged that
Congress and the administration face "formidable near-term
challenges" that must be addressed as they take steps to stabilize the
financial system, reduce home foreclosures and spur banks to lend more freely.
Energy prices slump on
surplus of oil in storage
SIOUX FALLS, S.D. (AP) --
Oil prices took a dive Wednesday after a government report on unused crude in
storage suggested the monthlong rally in energy prices may have been premature.
After rising for seven
straight days and threatening to break the $70 barrier, benchmark crude for
July delivery tumbled 3.5 percent, or $2.43, to $66.12 a barrel on the New York
Mercantile Exchange.
The catalyst was a report
from the Energy Department's Energy Information Administration, which said
crude in storage rose by nearly 3 million barrels, which is about 20 percent
above year-ago levels.
Carl Icahn claims 2 seats in
Biogen proxy fight
NEW YORK (AP) -- Activist
investor Carl Icahn claimed two victories in his fight to place dissident
shareholders on Biogen Idec Inc.'s board Wednesday, but the biotechnology
company has not yet finished tallying votes.
Icahn wants to seat four
shareholders on Biogen's 13-member board as part of a yearslong dispute with
the company's direction. The contentious proxy fight culminated in Biogen's
annual meeting in Cambridge, Mass., but the company recessed for most of the
day, saying it needed to give shareholders more time to vote.
After reconvening the
meeting at 2 p.m., it was promptly adjourned without final results.
AP Source: AIG agrees to
sell 2 NYC buildings
CHARLOTTE, N.C. (AP) -- The
embattled insurer American International Group Inc. is selling its headquarters
building in New York and a nearby building in a deal expected to close at the
end of this summer, a person familiar with the matter said Wednesday.
But the person said that AIG
is not disclosing the price or who the buyer is. The person asked for anonymity
because the sale has not been made public yet.
The building sales are the
latest move by AIG, which has received $182.5 billion in financial support from
the government since September, to shed assets to repay the loan package.
Appeals court to hear appeal
of Chrysler sale
NEW YORK (AP) -- A federal
appeals court has halted Chrysler's sale of the bulk of its assets to Italy's
Fiat pending an appeal by a trio of Indiana state pension and construction
funds.
The U.S. Court of Appeals
for the Second Circuit said late Tuesday it will hear arguments in the case
Friday afternoon in New York, according to the Indiana treasurer's office.
Chrysler LLC had hoped to close the sale by the end of week, pending regulatory
approval.
Chrysler has maintained that
the deal with Fiat Group SpA is its only hope of avoiding selling itself off
piece by piece. If the sale doesn't close by June 15, Fiat has the option of
pulling out of the deal.
SAIC 1st-quarter profit
rises 13 percent
WASHINGTON (AP) -- SAIC Inc.
said Wednesday its fiscal first-quarter profit grew 13 percent as revenue
soared on U.S. military spending on defense logistics and cybersecurity.
The San Diego-based
contractor also assured investors plans by the Pentagon to restructure the
Army's $160 billion modernization plan, known as Future Combat Systems, will
not hurt its financial results for the rest of the year.
SAIC says it still expects
revenue to grow between 6 percent and 9 percent and earnings to rise between 11
percent to 18 percent.
Merkel critical of central
banks
BERLIN (AP) -- German
Chancellor Angela Merkel has voiced skepticism about leading central banks'
approach to tackling the economic crisis, suggesting that they may be storing
up more trouble for the years ahead.
Merkel's comments come as
the European Central Bank has faced criticism from some analysts for not being
as aggressive as either the U.S. Federal Reserve or the Bank of England, both
in cutting interest rates and in promoting measures such as bond purchases to
boost the money supply.
By The Associated Press
The Dow fell 65.63, or 0.8
percent, to 8,675.24.
The Standard & Poor's
500 index fell 12.98, or 1.4 percent, to 931.76. The Nasdaq composite index
fell 10.88, or 0.6 percent, to 1,825.92.
Benchmark crude for July
delivery tumbled 3.5 percent, or $2.43, to $66.12 a barrel on the New York
Mercantile Exchange.
In other Nymex trading,
gasoline for June delivery slipped 2.36 cents to settle at $1.9016 a gallon and
heating oil fell by 5.95 cents to settle at $1.7384 a gallon. Natural gas for
June delivery tumbled 35.4 cents to settle at $3.766 per 1,000 cubic feet.
In London, Brent prices lost
$2.29 to settle at $65.88 a barrel on the ICE Futures exchange.