The company is focusing on forming a new company from the automaker's best assets, people familiar with the matter told the news service, "The efforts to set a new cost-cut goal center on how to go beyond a proposal to slash debt by 46 percent and shed 47,000 jobs in 2009, and will include talks with Treasury officials."
Bankruptcy is becoming increasingly likely as bondholders and the United Auto Workers rejected further concessions. Chief Executive Fritz Henderson, who rejected the ousted Rick Wagoner, has also said it was increasingly likely that the automaker would seek protection from creditors. Shares of the automaker were trading down in pre-market trading.
Shares of Alcoa Inc. (AA) were down ahead of the aluminum maker's scheduled earnings release after the close of trading today. Analysts expect the Dow component to lose money and will look to the Pittsburgh company's earnings as a bellwether for the rest of earnings season.
In other news, banks stocks were getting pounded amidst renewed worries about the toxic assets on their balance sheets. Shares of Citigroup Inc. (C) and Bank of America Corp. (BAC) were among the decliners. Other companies reporting this week include Family Dollar Stores Inc. (FDO), Constellation Brands Inc. (STZ) and Bed Bath & Beyond Inc. (BBBY).
The International Monetary Fund expects toxic debt from banks and insurers to hit $4 trillion by the end of next year, nearly double the $2.2 trillion level it expected in a January forecast . Shares also are under pressure after influential analyst Mike Mayo issued a gloomy forecast on Monday. George Soros, the billionaire investor, also said that banks were basically insolvent.
Pimco's respected CEO and Co-Chief Investment Officer Mohammed El-Erian added to the pessimism, telling CNBC that he is "very underweight" stocks, shrinking his firm's exposure to equities to 30 percent compared with around 60 percent in normal market conditions.
"Fundamentally we are in a volatile journey to what we call the new normal, the new destination," he told the cable channel. " The world is changing," El-Erian said.