Fiat closes deal to take bulk of Chrysler's assets
DETROIT (AP) -- Italy's Fiat
is the new owner of most of Chrysler's assets, closing a deal Wednesday that
saves the troubled U.S. automaker from liquidation and places a new company in
the hands of Fiat's CEO.
The deal creates a leaner
company known as Chrysler Group LLC, which is not in bankruptcy protection and
is free of billions in debt, 789 underperforming dealerships and burdensome
labor costs that hobbled the old Chrysler LLC.
Fiat CEO Sergio Marchionne immediately
was named CEO of the new company, which said in a statement that it would soon
reopen Chrysler factories that were idled during the bankruptcy process,
costing the automaker $100 million per day.
The new company will focus
on smaller vehicles, areas in which Chrysler was weak.
Administration seeks ways to
tame corporate pay
WASHINGTON (AP) -- The Obama
administration rejected direct intervention in corporate pay decisions
Wednesday even as officials argued that excessive compensation in the private
sector contributed to the nation's financial crisis.
Instead, the administration
plans to seek legislation that would try to tame compensation through
shareholder pressure and less management influence on pay decisions.
At the same time, the
administration drew a sharp distinction between the overall corporate world and
those institutions that have tapped the government's $700 billion Troubled
Asset Relief Program.
Stocks fall on inflation,
interest-rate jitters
NEW YORK (AP) -- The stock
market has a new priority: interest rates.
Stocks fell moderately
Wednesday after the government sold $19 billion in 10-year Treasury notes in a
relatively weak auction. There were plenty of bidders, but the government had
to lure them in with a higher yield than the market had anticipated.
The yield on the benchmark
10-year Treasury note rose for the fourth time in five days, jumping to 3.95
percent from 3.86 percent late Tuesday. That helped send stocks broadly lower,
with the Dow Jones industrial average losing 24 points.
Investors are concerned the
government's debt load is growing so large that it will lead to higher
inflation and soaring interest rates. Higher interest rates could hamper the
economy's recovery by raising borrowing costs for consumers, while inflation
could also discourage them from spending.
New P&G leader to
streamline, seek growth overseas
CINCINNATI (AP) -- New
Procter & Gamble Co. chief Bob McDonald sees a brighter future for the
172-year-old company through selling more diapers, detergent and shampoo in
places like India and Africa.
With ambitious plans to
double sales and streamline the world's largest consumer products company,
whose sales and earnings growth have slowed during the recession, McDonald is
to move from chief operating officer to CEO in three weeks.
Lafley will stay on as a
full-time chairman and adviser to McDonald after nine years as CEO of the maker
of Tide detergent, Crest toothpaste and Olay skin cream.
Budget deficit hits record
for May of $189.7B
WASHINGTON (AP) -- The
federal budget deficit soared to a record for May of $189.7 billion, pushing
the tide of red ink close to $1 trillion with four months left in the budget
year.
The rising deficit reflects
increased government spending due to the recession, and billions of dollars
spent on bailouts for banks and other troubled companies.
The Treasury Department
reported Wednesday that the red ink so far this year totals $991.9 billion. The
administration is projecting the deficit for the budget year that began Oct. 1,
will total a record $1.84 trillion. That would be more than four times the
amount of last year's record deficit.
Fed survey sees signs
recession is easing
WASHINGTON (AP) -- The
economy's sharp downhill slide eased in the late spring and hopes for future
business activity improved, suggesting that the worst of the recession has
passed.
A Federal Reserve snapshot
of economic conditions issued Wednesday found that five of the Fed's 12 regions
said the "downward trend is showing signs of moderating."
In addition,
"several" regions said their expectations of future business activity
have improved, although they don't see a "substantial increase"
through the end of the year. In the last survey, several regions simply noted
signs of some stability at low levels.
Palm appoints ex-Apple whiz
as CEO, chairman
SUNNYVALE, Calif. (AP) --
Jon Rubinstein, a former executive behind Apple Inc.'s iPod, on Wednesday was
named chief executive of smartphone maker Palm Inc., replacing Ed Colligan who
is stepping down after 16 years with the company.
The appointment, effective
Friday, comes just days after Palm launched the $200 Pre, a well-regarded rival
to Apple's blockbuster iPhone device.
Rubinstein, 53, will remain
executive chairman, a post he assumed in October 2007 to help bring innovation
back to the company. He said in a statement he was excited about his expanded
role.
Oil prices strike new high
for 2009
HOUSTON (AP) -- Oil prices
surged again Wednesday to a new high for the year with investors pouring money
into crude markets as a hedge against inflation.
Adding to crude's advance
was new government data that showed an uptick in U.S. demand for gasoline. Yet
given how much cheaper gas is now compared with last year, the recession
clearly has taken a toll on the amount of money businesses and consumers are
willing to spend on energy.
Home Depot raises full-year
earnings guidance
CHICAGO (AP) -- Home Depot
Inc. said Wednesday that its full-year earnings from continuing operations may
come in better than previously forecast, thanks to a combination of individual
homeowners spending more and stronger overall sales.
The nation's largest home
improvement chain issued the rosier forecast weeks after smaller rival Lowe's
Cos. raised its full-year outlook after reporting its first-quarter results in
mid-May.
Atlanta-based Home Depot,
which held its annual investor meeting on Wednesday, expects earnings per share
from continuing operations to be flat to down 7 percent. In February, the
retailer forecast a 7 percent decline.
NEW YORK (AP) -- The
government was forced to lift the yield on 10-year Treasury notes to 3.99
percent to lure in buyers at an auction Wednesday. That was the highest yield
it's offered since last August, before it started bailing out the nation's
financial industry.
In the end, the government
still got plenty of buyers for its $19 billion in 10-year notes. The ratio of
bids to notes sold was decent at 2.66, and indirect bidding -- a measure of
foreign buying -- was fairly robust at 34 percent.
But the auction signalled to
investors that financing the nation's financial bailout and economic stimulus
packages is not going to come cheaply. Already, some foreign governments
including Russia are talking about reducing their U.S. debt holdings because of
the weak dollar.
By The Associated Press
The Dow Jones industrials
fell 24.04, or 0.3 percent, to 8,739.02 after sliding as much as 123 points
after the release of the Treasury auction results in the early afternoon.
The Standard & Poor's 500
index fell 3.28, or 0.4 percent, to 939.15. The Nasdaq composite index fell
7.05, or 0.4 percent, to 1,853.08.
Benchmark crude for July
delivery rose $1.32 to settle at $71.33 a barrel in trading on the New York
Mercantile Exchange after earlier touching $71.79. It was the second time in as
many days that crude hit new heights this year at the close.
In other Nymex trading,
gasoline rose by 4.86 cents to settle at $2.0153 a gallon while heating oil
settled at $1.8326 a gallon -- up 2.5 cents. Natural gas for July delivery fell
2.3 cents to $3.708 per 1,000 cubic feet.
In London, Brent prices rose
in tandem with Nymex crude, gaining $1.18 to settle at $70.80 a barrel on the
ICE Futures exchange.