Sentiment, Oil Dampen Stock Prospects

News at a Glance

• Stocks Sag: Shares drop on range-bound trading.
• Oil Slide: Worst one-week drop since January.
• Chevron Warns: Earnings hit by weak dollar.
• Sentiment Ebbs: Consumers less confident.

The Lowdown

• General Motors exited bankruptcy in a streamlined state, shedding its Pontiac, Hummer and Saturn brands. Fritz Henderson, GM's chief executive and Edward E. Whitacre Jr., its new chairman, appeared at a 9 a.m. news conference to announce the start of the "New GM." The company spent a shorter-than-expected 40 days in bankrupcty protection, and its emergence could represent a major achievement for the Obama Administration, which has committed $50 billion to bail out GM.
• AIG (AIG) is preparing to pay millions of additional dollars worth of executive bonuses on July 15, The Washington Post reported Friday, citing anonymous sources. The company is reportedly consulting with Kenneth Feinberg, the newly appointed compensation czar, in order to avoid the negative attention that accompanied its last bonus announcement. AIG will have to convince Feinberg of the fairness of the bonus package, an anonymous AIG official told the Post. His approval is critical to winning the government's blessing for the bonuses. AIG has received more than $80 billion in federal loans since September.

The Economy

• The U.S. trade deficit fell 9.8% to $26.0 billion in May, the Commerce Department reported Friday. The news surprised economists who had forecast a deficit of $30 billion. The trade deficit is now at its lowest level since November 1999. Exports, excluding agriculture, rose 1.6% in May, while imports, excluding oil, fell 0.6%. REPORT
• The Reuters/University of Michigan preliminary reading of the July index of consumer sentiment was worse than expected, falling to 64.6 from its earlier level of 70.8. Analysts projected that the index, which is designed to measure the national attitude toward buying, would come in at 70.0. STORY