U.S. markets climb Friday
NEW YORK, May 8 (UPI) -- U.S. markets rose Friday in spite of labor news that put the unemployment rate at 8.9 percent.
The Labor Department said the nation has lost 5.7 million jobs since the recession began in December 2007. Manufacturing lost 149,000 jobs in April. Construction lost 110,000.
Investors are also absorbing the news that 10 of the nation's 19 largest banks were cited by the Treasury Department as requiring an additional capital cushion. But the $74.5 billion total requirement was far smaller than originally feared.
By close, the Dow Jones industrial average gained 164.80 points, or 1.96 percent, to 8,574.65. The Standard & Poor's 500 rose 21.84 or 2.41 percent to 929.23. The Nasdaq composite index gained 22.76 or 1.33 percent to 1,739.00.
On the New York Stock Exchange, 2,643 stocks advanced and 433 declined on a volume of 9.2 billion shares traded.
The benchmark 10-year U.S. Treasury bond rose 14/32 to yield 3.29 percent.
The euro rose to $1.3628, compared to Thursday's $1.3383. Against the Japanese yen, the dollar fell to 98.46 yen, compared to Thursday's 99.04 yen.
In Tokyo, the Nikkei average gained 47.13 points to 9,432.83, up 0.5 percent.
In London, the FTSE 100 index gained 63.41 points, 1.44 percent, to 4,462.09.
Chrysler creditors back down on breakup
NEW YORK, May 8 (UPI) -- Lenders who favored liquidation of U.S. automaker Chrysler have given up the cause of forcing a sale to break up the company, the lenders' attorney said.
"It got to the point where it was the collective decision that there was insufficient critical mass to make this fight," attorney Glenn Kurtz of White & Case said, CNNMoney.com reported Friday.
The group was comprised of smaller lenders that were owed about $295 million. But, the group disbanded after OppenheimerFunds Inc., owed $100 million, and private equity Stairway Capital backed down.
"The fact simply is ... our group has become too small to have a voice within the bankruptcy," Stairway said in a statement.
In total, Chrysler owes $6.9 billion to creditors, including JPMorgan Chase, Citigroup Inc., Morgan Stanley and Goldman Sachs, four firms that previously agreed to accept $2.25 billion for the assets. Smaller creditors, however, held off on the agreement.
The government's restructuring plan includes United Auto Workers ending up with 55 percent of the company with Italian automaker Fiat taking 35 percent. The U.S. and Canadian governments, which have loaned Chrysler billions in emergency aid, would own 10 percent.
Fannie Mae posts $19B shortfall
WASHINGTON, May 8 (UPI) -- The Federal National Mortgage Association said it lost $23 billion in the first quarter, prompting a fund transfer of $19 billion from the U.S. Treasury.
The government's agreement with Fannie Mae, when it seized the company in September, included a transfer of funds to make up for any shortfalls, The Washington Post reported Friday.
The government had already given the mortgage broker $15 billion in emergency funds. It has since said it would make $200 billion available to both Fannie Mae and Freddie Mac to keep them afloat. The Federal Home Loan Mortgage Corp. -- Freddie Mac -- has already received $50 billion.
In a statement, Fannie Mae said it expects "net worth deficit in future periods, and therefore will be required to obtain additional funding from the Treasury."
The news comes on the heels of the U.S. Department stress test results, released Thursday, that said the country's 19 largest banks required $74.5 billion in additional capital to protect themselves from further economic declines.
Two banks overcome stress test demands
NEW YORK, May 8 (UPI) -- Two large U.S. banks went above and beyond regulatory requirements Friday, taking less than a day to build capital cushions the Treasury Department demanded.
Wells Fargo & Co. raised $7.5 billion selling common stock Friday after the Treasury Department said Thursday it would need to raise $6 billion and Morgan Stanley raised $7.5 billion, selling stocks and bonds, The New York Times reported Friday.
The Treasury Department had told Morgan Stanley to increase capital by $1.8 billion.
Regulators told eight other banks to raise $74.5 billion to strengthen their positions in the event of a steeper economic downturn.
U.S. stock markets turned higher Friday, pointing to investor confidence the banks could weather the storm.
Bank of America faces the challenge of raising $33.9 billion, which it could accomplish with a sale of assets and a shift of Troubled Asset Relief Funds from preferred stock to common shares. The bank has accepted $45 billion in government aid.
Citigroup Inc. has also accepted $45 billion, but will still need to raise about $5.5 billion in addition to converting the government's preferred shares to common stock, the Times said.
