Ford reports a 24% decline in U.S. sales for May, but the auto maker still posts its highest monthly sales since last June. Ford plans to take advantage of the competitors’ woes, announcing a 10,000-vehicle increase in 2Q production.

US STOCKS FLAT ON HOUSING DATA

U.S. stocks trade flat, seesawing between gains and losses, after a report
shows pending sales of existing homes in April posted their largest monthly
increase in eight years. Financial stocks trail the broader market as blue-chip firms announced plans to raise fresh capital. Treasury prices stabilize.

US PENDING HOME SALES CLIMB 6.7% IN APRIL

Index of pending sales of previously owned homes increases for a third month
in a row, the National Association of Realtors says, rising 6.7% in April to
90.3, as buyers seized on foreclosure-cheapened property, low interest rates
and a tax credit.

AMERICAN EXPRESS, JPMORGAN PRICE STOCK DEALS

JPMorgan sells 142 million shares at $35.25 a share, raising $5 billion.
American Express sells a 19.8 million-share deal, priced at $25.25 a share,
raising $500 million. Deals done in preparation to exit the federal bailout
program. JPMorgan shares fall 4%; American Express is down 6%.

GM SELLING HUMMER TO PRIVATELY OWNED CHINA CO

GM reaches a preliminary agreement to sell its Hummer brand to Sichuan
Tengzhong Heavy Industrial Machinery, the New York Times reports, citing a
person familiar with the Chinese government’s approval process.

BOFA TO ‘COMFORTABLY’ TOP CAPITAL-RAISE TARGET

Bank of America says it will “comfortably” exceed the government’s $33.9
billion capital-raising mandate, with the company putting its current total at
$33 billion. Shares rise 1%.

TEMASEK, RICHARD LI JOIN BID FOR AIG INVESTMENTS

Singapore’s Temasek Holdings and Richard Li’s Pacific Century Group are among
the financial backers considering entering exclusive negotiations to buy
American International Group’s asset-management business, which could go for
$500 million.

BRAZILIAN AIR FORCE FINDS PLANE DEBRIS

Brazilian air force aircraft searching for a missing Air France flight that
had been carrying 228 people have found debris from a plane. The “small
remains” were located 400 miles northeast of Brazil’s Fernando do Noronha
island.

COLLECTIONS FIRMS TO END DECEPTIVE PRACTICES

Creditors Interchange Receivable Management LLC, Capital Management Services
LP and Tri-Financial LLC agree to change their business practices after a probe
by NY Attorney General Andrew Cuomo’s office.

MOODY’S: OUTLOOK STILL NEGATIVE FOR US BANKS

Moody’s Investors Services says its outlook for credit ratings on the U.S.
banking sector remains negative as the recession is expected to lead to $470
billion in loan and investment losses and write-downs this year and next.

CHRYSLER SALE APPEAL TO BE HEARD BY 2ND CIRCUIT

Bankruptcy judge Arthur Gonzalez in Manhattan certifies the sale of the bulk
of Chrysler’s assets to a group led by Fiat, paving the way for a challenge of
the sale order to be heard by the U.S. Second Circuit Court of Appeals,
skipping the usual review by a U.S. district judge.

US LAWMAKERS WANT TO SHINE MORE LIGHT ON FED

The Federal Reserve’s longtime penchant for opacity is coming under fire from
lawmakers demanding to know more about the central bank’s role in the U.S.
government’s response to the financial crisis.

MORGAN STANLEY TO RAISE $2.2B IN BID TO EXIT TARP

Morgan Stanley plans a $2.2 billion stock offering, a deal that is expected
to include China Investment and Mitsubishi UFJ Financial Group, as it prepares
to repay taxpayer money it received under the government’s Troubled Asset
Relief Program. Shares fall 4%.

SEC HEAD VOWS TO IMPROVE AGENCY OPERATIONS

SEC Chairman Mary Schapiro tells U.S. lawmakers she’s “disappointed” to learn
of short-comings in the agency’s internal operations and she plans to hire a
chief operating officer and improve records management.

PIMCO FILES FOR SIX MORE ETFS

In another sign it hopes to make a big mark on the ETF business, Pimco files
to launch six new ETFs. Move comes the same day Pimco’s first ETF, a short-term
Treasury fund, begins trading among investors on NYSE Arca.

GEITHNER PLAYS UP CONSENSUS BETWEEN CHINA, US

U.S. Treasury Secretary Timothy Geithner says he believes Chinese leaders
understand U.S. measures to tackle the financial crisis and are confident in
the U.S. economy, while he in turn praises China’s own stimulus measures.

TOBACCO REGULATION BILL ADVANCES IN SENATE

The U.S. Senate takes a step forward toward debate of a bill that would give
the Food and Drug Administration authority to regulate tobacco, as senators
show strong support for the measure in a procedural vote.

HURRICANE SEASON TO BE SLIGHTLY BELOW AVERAGE

Colorado State University forecasters are trimming their forecast for what
they expect to be a “slightly below average” 2009 Atlantic hurricane season.
They predict 11 named storms, with five hurricanes, two of which will be
intense.

CFTC ASKS LAWMAKERS FOR BIGGER BUDGET

The head of the U.S. Commodity Futures Trading Commission tells federal
lawmakers that President Barack Obama’s recent request to increase the CFTC’s
budget by $14.6 million may still not be enough to meet the agency’s needs.

COURT OKS US CANCELLATION OF FIGHTER JET DEAL

Federal appeals court rules the government was justified in canceling a
contract with a Boeing unit and General Dynamics to build a new Navy stealth
fighter. Then-Secretary of Defense Dick Cheney terminated the contract in 1991.

MINNESOTA GOVERNOR WON’T SEEK 3RD TERM, REPORT SAYS

Minnesota Gov. Tim Pawlenty, a Republican, will not run for a third term in
the 2010 election, Twin Cities television station WCCO reports, citing sources.
Pawlenty is expected to make the announcement Tuesday afternoon.

======= DOW JONES NEWSWIRES ANALYSIS AND COMMENTARIES =======

AL’S EMPORIUM
Let Fingers Do The Walking Into Bankruptcy

Al Lewis takes a look at the Chapter 11 bankruptcy of Yellow Pages publisher
R. H. Donnelley and considers how much was due to economic factors,
acquisitions and the leadership of CEO Dave Swanson.

MARK TO MARKET
Playing Footsie With Uncle Sam Has Its Price

Polonius warned his son Laertes in Shakespeare’s “Hamlet”: “Neither a
borrower nor a lender be.” Why not, you ask? A borrower gives the lender power
over him; the lender gives the borrower power over him.

============ U.S. MARKETS ACTION ===========
DJIA up 20.69 points to 8742.13
NASDAQ up 7.01 points to 1835.69
S&P 500 up 1.89 points to 944.76
10-year T-note 95 10/32 at 3.690 yield dn .024
NYMEX Crude up $0.05 at $ 68.63/bbl
Euro/Dollar up 0.0148 at 1.4308

Major indexes seesawed between gains and losses through the day, but major milestones for the year remained in sight. The Dow Jones Industrial Average was recently up 30 points, or 0.4%, to 8751. At its morning high, the blue-chip measure rose about 66 points, almost 11 points above its 2008 close of 8776.39.

The Dow was boosted by a gain of 6% in component Alcoa, which rose amid an uptick in metals prices as the dollar weakened. August gold rose $4.40 to$984.40 an ounce on the Comex division of the New York Mercantile Exchange. July silver rose 22 cents to $15.955 and peaked at $16.02, its highest mark since August. The U.S. Dollar Index was off 0.9%.

The S&P 500 was up 0.3% as its materials sector gained 1.2%. Its health-care and consumer-staples categories also performed well. The S&P moved above its 200-day moving average of about 920 early on Monday, a development that manyinvestors see as a bullish sign. Technicians are looking for the index to stay above that level for at least three days before confirming a broad uptrend.

“This is a total technical rally,” said Dave Rovelli, managing director for U.S. equity trading at Canaccord Adams. “I wouldn’t buy stocks here unless you had a real long-term horizon.”

The Nasdaq Composite Index was up 0.5% despite overall weakness in tech stocks.

Financial stocks weighed on both the Nasdaq and the broader market,
continuing to lag the market’s most recent leg up. Hurting financials, a number of large banks said they would sell shares to raise capital to pay back government bailout funds. Regulators said that large banks must prove they can raise money from private investors before exiting the Troubled Asset Relief Program.

American Express sank 4.5% and JPMorgan Chase fell 3.5% after both surprised investors by saying they’d sell stock. Morgan Stanley was flat after it said it’s planning a $2.2 billion stock offering. Bank stocks had largely pushed higher on secondary offerings in May, but considering the dilution for shareholders caused by an offering, traders said the move lower wasn’t surprising in Tuesday’s trade.

Phil Roth, a market analyst at Miller Tabak & Co. in New York, said that it’s somewhat troublesome that the S&P’s financial sector has underperformed thebroader market lately.

“We’re not seeing a lot of divergences on the charts right now, but that one is interesting, considering how much of a leader the financials had been on the upside before,” said Roth, adding, “I think the market could have a little farther to go, but we’ve probably seen the majority of the gains.”

On a more welcome note for investors, the National Association of Realtors said pending sales of existing homes in April rose 6.7% — the biggest monthly jump in eight years. The data built on a flurry of other recent reports suggesting that the housing market and the broader economy are stabilizing.

Treasury prices, which have been under heavy pressure lately, stabilized. The 10-year note was little changed, yielding 3.681%. The 30-year bond, which is closely tied to the mortgage market, rose 4/32 to yield 4.531%.

Harold Lavender, an independent futures trader in Chicago active in contracts on Treasurys and the Dow, said traders there were heartened by both the housing data and the possibility that some banks might pay off their loans from the government’s bailout fund after the latest round of capital-raising.

“The real question now is whether the [stock] market has the ability to sustain an up move,” said Lavender. “What’s tempering things are concerns about commercial real estate and consumer debt. We know those things are lurking out there with the potential to cause problems over the next few months.”

Jerry Kallas, a managing director at Terra Nova Financial in Chicago, said it’s been promising to see an array of economic reports come in better than expected in recent weeks, but noted one nagging concern is that the government’s monthly jobs reports have remained lackluster.

This trend will again be put to the test Friday morning when the Labor Department is due to issue May’s tally of U.S. payrolls. Analysts expect to see a decline of about 525,000 jobs, roughly in line with the big losses that have become the norm since last fall’s credit crisis.

“If we were to get even a 200,000 number at some point, the market would go screaming higher,” said Kallas. “But it’s too early yet for that.”