Stocks set to fall as automaker plans get rejected

NEW YORK (AP) -- Stocks were set for a selloff Monday after the White House rejected the turnaround plans from General Motors Corp. and Chrysler.

The Obama administration also replaced GM's CEO Rick Wagoner with the company's chief operating officer, Fritz Henderson.

The specter of an automaker bankruptcy has been looming over investors for months, but the recent developments made the scenario more likely. GM is getting 60 days worth of financing to restructure, while Chrysler is getting up to $6 billion and 30 days to complete a deal with Italian automaker Fiat.

President Barack Obama is scheduled to make an official announcement at the White House at 11 a.m. Eastern time.

After the Dow Jones industrials pulled back by 1.9 percent on Friday, stocks were poised for another retreat. Dow industrials futures fell 162, or 2.1 percent, to 7,600. Standard & Poor's 500 index futures fell 19.30, or 2.4 percent, to 796.80, while Nasdaq 100 index futures fell 25.25, or 2 percent, to 1,230.75.

Before Friday, the Dow had surged 21 percent over just 13 days -- the quickest rally of that magnitude since 1938.

No major economic reports are scheduled for Monday, but data on employment, manufacturing, and the service sector are due later this week. Friday's March employment report is expected to show that U.S. employers shed more than 650,000 for the fourth straight month.

Investors will also be focusing on Thursday's meeting in London of G-20 leaders of industrialized and developing countries. The group is expected to increase financial regulation, but investors' hopes for a coordinated fiscal boost are waning. The Financial Times, citing a draft of the meeting's communique, reported that there are no specific plans for a fiscal stimulus package.

And bank worries continue to dog the market. Over the weekend, Spain was forced to bail out a bank for the first time since the financial crisis began. The Bank of Spain took control of the small savings bank and provided $12 billion in government funds to support it.

Bond prices were mostly higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.71 percent from 2.76 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.13 percent from 0.12 percent.

Crude oil fell $1.38 to $51 a barrel in electronic trading on the New York Mercantile Exchange.

The dollar was mostly higher against other major currencies, while gold prices fell.

Overseas, Japan's Nikkei stock average fell 4.53 percent. In afternoon trading, Britain's FTSE 100 fell 1.8 percent, Germany's DAX index fell 3.1 percent, and France's CAC-40 fell 2.2 percent.

(Copyright 2009 by The Associated Press. All Rights Reserved.)