CNN Financial News Producer
Could Detroit’s Big Three soon be the Big One?
Ford this morning reported a smaller-than-expected loss for the first quarter, and the company says it remains on track to meet its internal financial targets despite the worst quarter for auto sales in 26 years.
Ford, the only American automaker that did not take any federal bailout money, posted net losses of $1.4 billion. Revenue plunged 37% during the quarter to $24.8 billion as vehicle sales in the U.S. dropped 43%. But revenue was also better than analysts' forecasts.
Still, the latest losses come on top of $30 billion in net losses the company reported from 2006 through 2008.
Ford CEO Alan Mulally says that the company is still confident it will not need a federal loan unless the economy gets significantly worse, or unless there is an uncontrolled bankruptcy in the industry that disrupts the flow of parts from Ford's suppliers.
Meanwhile, privately-held Chrysler has one week to reach deals with Fiat, unions and banks, raising doubts it can avoid bankruptcy.
The New York Times is reporting that the Treasury Department is directing the automaker to prepare a Chapter 11 bankruptcy filing as soon as next week.
And General Motors, of course, is facing its own struggles as it plans to idle 13 of 20 North American plants for up to nine weeks this summer to pare down its vehicle inventory.
Today we learned that the Treasury Department has provided GM with another $2 billion in loans as the automaker attempts to restructure. The payment was made to GM on Wednesday and provides working capital to the company.
GM has until June 1 to complete restructuring plans that satisfy the Obama Administration’s auto task force, while Chrysler has until the end of April.
Durable goods orders, new home sales dip
On the economic front, new orders for durable goods - big-ticket items meant to last three years or more - slipped 0.8% in March, far less than Wall Street expected.
Durable goods orders have now fallen for seven months out of the last eight.
And sales of newly constructed homes are showing indications, ever so slight, that the housing decline may be near an end.
The Commerce Department said this morning that new home sales fell 0.6% last month to a seasonally adjusted annual rate of 356,000. But that was from a rate of 358,000 in February that was revised up from the originally reported at 337,000.
The net revision to the prior three months equals an increase of 31,000 units, according to Wachovia Economics Group.
Fed to provide “stress test” details
Regulators today will privately begin telling the nation's 19 largest financial institutions how well they performed in “stress tests” to assess their soundness.
The Fed is expected to release details of the methodology used for the tests, although the results won't be publicly released until May 4.
These tests are intended to gauge how banks would fare in a severe recession and determine which ones need more capital.
Ford fuels rally on Wall Street
And stocks are rallying, reviving the market’s advance as investors welcome Ford's smaller-than-expected loss and results from a slew of other influential companies, including Amazon.com, 3M, American Express, Honeywell and Microsoft.
Stocks managed a late-session rally Thursday near the end of a turbulent week on Wall Street. But at the moment, stocks are down for the week in the aftermath of a six week advance that boosted the S&P 500 nearly 29% off of 12-year lows.
The Dow Industrials need to post a rally of about 175 points to notch a 7th consecutive week of gains... less so for the Nasdaq and S&P 500.
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