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Economic Reports Indicate U.S. Recovery; Treasury Yields Soar Most in Eight Months; Citi and GM Dropped From Dow 30; Crude Prices Continue to Climb; Deere Announces New CEO; Delphi to Emerge From Bankruptcy
Three economic reports released yesterday (Monday) indicate the U.S. economy is recovering from the worst slowdown since the Great Depression, Reuters reported. The Institute for Supply Management's closely monitored index of manufacturing activity rose to 42.8 last month from 40.1 in April, the highest reading since September and the fifth straight monthly rise. Meanwhile, April consumer spending fell by just 0.1%, after falling 0.3% in March. Spending on construction projects rose 0.8% in April from March, the biggest increase since August.
The yield on 10-year U.S. Treasury bonds soared the most in eight months yesterday (Monday) as stocks and commodities surged on signs that the recession is losing its teeth. Hints of an economic rebound reduce investor demand for safer government debt and increase inflationary pressure. The gap between two- and 10- year yields widened to 2.72 percentage points, approaching the record 2.76 percentage points set on May 27, Bloomberg reported.
Citigroup Inc. (NYSE: C) and General Motors Corp. (NYSE: GM) will be taken out of the Dow Jones Industrial Average, the benchmark index of 30 blue-chip stocks, effective June 8. Property and casualty insurer The Travelers Co.'s Inc. (NYSE: TRV) will replace Citigroup and Cisco Systems Inc. (NASDAQ: CSCO) will replace GM, Reutersreported. The plummeting value of both stocks has held the index back since the U.S. recession began more than a year ago.
Crude oil prices yesterday (Monday) continued their upward march, with futures jumping $2.08 a barrel, or 3.14%, to settle at $68.39 a barrel on the New York Mercantile Exchange (NYMEX). Crude prices have more than doubled since falling below $34 a barrel in February. Light, sweet crude for July delivery traded up as much as $2.37 a barrel yesterday reaching as high as $68.68. London Brent crude gained $2.34 to $67.86 a barrel.
Auto-parts supplier Delphi Corp. (OTC: DPHIQ) announced yesterday (Monday) that it reached a deal to sell some of its assets to private equity firm Parnassus Holdings II LLC - an affiliate of Platinum Equity Holdings - and emerge from bankruptcy protection. General Motors Corp. (NYSE: GM), will acquire some of the company's North American plants, including its global steering business. Delphi filed for Chapter 11 bankruptcy in October 2005.