Wednesday's Early Headlines
plans to shut down the hedge fund business and private-equity division of its principal investment management group, according to a
surprised bankers in the past week by demanding they raise specific amounts of new capital before repaying taxpayer funds, applying a more stringent assessment than the stress tests last month, according to
. JPMorgan and
were told they need to boost common equity, less than four weeks after the stress tests showed they need no additional capital.
was directed to raise more funds after already selling stock to cover its stress-test shortfall, according to the report.
GM Confirms Sale of Hummer.
said Sichuan Tengzhong Heavy Industrial Machinery Co. will acquire the rights to the Hummer brand, along with a senior management and operational team. GM said the sale is expected to close by the end of third quarter. Financial terms weren't disclosed.
will remain in Chapter 11 reorganization by at least several days after a federal court said it would hear an appeal by a group of Indiana pension funds challenging the sale of most of Chrysler's assets to the company's proposed partner,
. The sale to Fiat was approved early Monday by a bankruptcy judge.
Judge to Rule on Chrysler Dealer Closures.
- In other Chrysler news, a bankruptcy judge will rule Wednesday on whether the automaker can terminate the franchise agreements of 789 of its dealers as part of its ongoing restructuring. The U.S. automaker maintains that it needs to reduce its dealer base to a leaner network of about 2,400 dealers in order to emerge from Chapter 11 bankruptcy protection as a stronger company.
- The Fed said investor requests for loans to buy asset-backed securities increased to $11.5 billion from May, the program's highest monthly total and a sign of sustained interest after a slow start. The Term Asset-Backed Securities Loan Facility, or TALF, for June is the first to be expanded to include newly issued commercial mortgage backed securities, or CMBS, as acceptable TALF collateral. Earlier this month, Fed Chairman Ben Bernanke said demand for the TALF should rise in June from May's subscription total of $10.9 billion as investors become more comfortable with the program.
has raised its bid for
to $30 a share, matching an offer made by rival
. The all cash and stock deal is valued at about $1.9 billion.
Earnings and Economic News
employment report, which can sometimes act as a strong indicator of how the Labor Department's own nonfarm payrolls report will shape up, will be released Wednesday at 8:15 a.m. EDT.
Economists expect the ADP report to show a decline of 525,000 jobs in May after a 491,000 drop in April. By comparison, the Labor Department's report, due Friday, should show a loss of 550,000 jobs last month after a better-than-expected 539,000 slide in April.
Also on the economic docket, the Institute for Supply Management will release its services index at 10 a.m., with economists expecting a reading of 45 in May after an impressive increase to 43.7 in April. Still, any reading below 50 connotes a contraction in services.
On Monday, the ISM's manufacturing index rose to 42.8, slightly more than expected and up from 40.1 in April, but it still indicated contraction in the manufacturing sector.
Also at 10 a.m., the April read on factory orders will be released, with economists expecting a 0.9% rise after a decline of 0.9% in March.
In other economic news,
Chairman Ben Bernanke will appear before the House of Representatives' budget committee to deliver testimony on current economic and financial conditions, as well as the federal budget.
reported a fiscal second-quarter loss of $83.2 million, or 52 cents a share, compared with a year-earlier loss of $93.7 million, or 59 cents a share, as revenue declined 51% to $398.3 million. Analysts surveyed by Thomson Reuters expected the company to report a loss of 50 cents a share. Robert Toll, chairman and CEO, said it "appears that some buyers are beginning to re-enter the new home market."