US Stock Markets End Lower On Friday; GM Plans To Sell Saturn And Wal-Mart Plans Share Buy Back

The markets were off Friday as the Dow Jones Industrial Average was the only major index to be in the black, up 0.15% to a level of 8,763.13.  The NASDAQ was down 0.03% closing at 1849.42 while the S&P 500 was down 0.25% ending at 940.09.  The 10-year once again saw price down ending with a yield of 3.83%.  A dollar gained strength today resulting with gold falling, settling at $962.60, and weaker demand saw crude prices fall to $68.44 a barrel.

General Motors (GMGMQ.PK: 0.865 +0.119 +15.95%) announced preliminary plans to sell its Saturn unit to Penske Automotive Group (PAG: 14.65 +0.05 +0.34%) which would put Penske in charge of Saturn’s parts, distribution, service, brands, and trademarks.  Mr. Roger Penske did not say how much the deal would be worth, but he said that the deal would allow for Saturn to retain 13,000 jobs in the corporation and the 350 dealerships.  The sale to Penske does not include the 51 dealerships that are located in Canada.  Penske stated that he will continue to sell three out of the current five models offered by Saturn, the Outlook, Vue, and Aura, while discontinuing the Sky and Astra.  Penske says that he will return to the original focus of Saturn, low cost energy efficient cars that effectively compete with other cars offered within the United States.  So far, Penske has been in talks with potential manufacturers to replace GM, with Renault Samsung Motors of Korea looking as a likely one.  If this agreement goes through, GM will be able to successfully sell two of the four non core brands, after announcing that they are selling their Hummer unit to China’s Sichuan Tengzhong Heavy Industrial Machinery Company Ltd. on Tuesday.

In other news, Wal-Mart (WMT: 51.07 +0.20 +0.39%) announced at its annual meeting plans to repurchase $15 billion worth of stock.  This is in an effort to show shareholders that Wal-Mart will be a successful company even after the recession is over.  Wal-Mart has been very successful in the weak economic environment, attracting many customers who were trading down because of their tightened purse strings, posting sales of over $400 billion for the first time in its company’s history.  The company was up over 16% last year, being one of only two companies in the Dow Jones to be in the black in 2008, but this year is down almost 9% as many begin to question on the outperformance of other retailers in what many think will be the end to economic turmoil.  All CEO Michael Duke and Wal-Mart can do is post good numbers and show investors that they are going to be a successful company in both good and bad economic conditions.

In great economic news, employment rates increased slightly but job losses slowed, giving the best economic signal so far that the economy might be bottoming out.  The US department of Labor said that non-farm payrolls dropped to 345,000 well below the estimated 520,000 number.  Unemployment was at 9.4% increasing 0.5 percentage points, missing the average economists estimate of 9.2%.  The gradual slowing of this number is great news for the economy as a whole but before we will see significant improvement it is necessary that this unemployment number does not keep going up.