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U.S. markets slide Wednesday

NEW YORK, June 3 (UPI) -- U.S. markets turned lower Wednesday after Automatic Data Processing said 532,000 private sector jobs were lost from April to May.

ADP also revised its March to April job loss estimate to 545,000, after previously estimating 491,000 jobs were lost a month ago. Factory orders rose 0.7 percent in April, the Census Bureau reported. But, non-manufacturing business activity declined in May, the Institute for Supply Management said.

By close, the Dow Jones industrial average dropped 65.59 points, or 0.75 percent, to 8,675.28. The Standard & Poor's (NYSE:MHP) 500 fell 1.37 percent, 12.98 points, to 931.76. The Nasdaq composite index lost 10.88 points, 0.59 percent, to 1,825.92.

On the New York Stock Exchange, 830 stocks advanced and 2,178 declined on a volume of 6.2 billion shares traded.

The benchmark 10-year U.S. Treasury bond rose 18/32 to yield 3.544 percent.

The euro rose to $1.4159, compared to Tuesday's $1.4155. Against the Japanese yen, the dollar held even, trading at 95.98 yen.

In Tokyo, the Nikkei average rose 0.38 percent, 37.36 points, to 9,741.67. In London, the FTSE 100 index shed 93.60 points, 2.09 percent, to 4,383.42.

Bernanke warns of tough choices
WASHINGTON, June 3 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke told the House Budget Committee Wednesday to expect difficult choices to control spending.

'In the end, the fundamental decision that the Congress, the Administration, and the American people must confront is how large a share of the nation's economic resources to devote to federal government programs, including entitlement programs,' Bernanke said in a prepared statement.

'Crucially, whatever size of government is chosen, tax rates must ultimately be set at a level sufficient enough to achieve an appropriate balance of spending and revenues in the long run,' he said.

With recently accelerated spending to prop up banks and automakers and combat unemployment, the federal deficit will reach $1.8 trillion in this fiscal year before declining to $1.3 trillion in 2010 and $900 billion in 2011, Bernanke said.

'As a consequence of this elevated level of borrowing,' Bernanke said, the federal debt would likely grow from 40 percent of the nation's gross domestic product to 70 percent.

'These developments would leave the debt-to-GDP ratio at its highest level since the early 1950s, the years following the massive debt buildup during World War II,' he said.

Auto execs likely to have pensions cut
DETROIT, June 3 (UPI) -- Bankruptcies at U.S. automakers Chrysler and General Motors Corp. (OOTC:GMGMQ) will likely cost former executives at least part of their pension plans, the companies said.

Chrysler has already demanded former executives, including the iconic Lee Iacocca, return or buy their company cars by May 31, The Detroit News reported Wednesday.

The gesture is one step towards retrieving what could be big money. GM's former Chief Executive Officer Rick Wagoner is still, technically on the payroll, receiving $1 for his work in 2009. But, Wagoner's $22 million pension plan is also at stake, the News said.

Robert Lutz the vice chairman of GM who has worked at Chrysler and Ford confirmed that his Chrysler pension had been reduced, but he would not give details, the newspaper said.

Chrysler cut pension payments to about 1,200 retirees when it filed for bankruptcy April 30. The fate of those pension plans will be decided in court.

GM said, 'the amount of non-qualified pension for some executive retirees may be affected,' but kept the decision out of its court proceedings.

The company will decide on pensions after GM emerges from bankruptcy, GM spokeswoman Julie Gibson said.

Ruling tips in Starbucks' favor
LOS ANGELES, June 3 (UPI) -- A California appeals court saved Starbucks Corp. (NASDAQ:SBUX) $100 million, ruling supervisors can keep their share of gratuities taken from counter top tip jars.

San Diego County Superior Court Judge Patricia Cowett issued the previous ruling on a complaint filed in 2004 on behalf of more than 100,000 Starbucks servers, the Los Angeles Times reported Wednesday.

Cowett ruled Starbucks should not have allowed supervisors to take a share of tips and ordered the company to compensate baristas with $86 million in lost income and $20 million in lost interest.

But the appeals court said supervisors at the nation's premier coffee chain 'essentially perform the same job as baristas.'

'The applicable statutes do not prohibit Starbucks from permitting shift supervisors to share in the proceeds placed in collective tip boxes,' the appeals court said.

David Lowe, a lawyer for the servers said the case would continue. 'We will be looking to the California Supreme Court to fix this error,' he said.

On average, shift supervisors make $3 more an hour than servers, supervisor Tameko Aubry told the Times.

Starbucks argued that shift supervisors take customer orders and pour coffee and should be entitled to a share of a store's collective tips.