Deal Talk Fires Up Stocks

"While the Fed said they stand ready to act, it seems to me that a rate cut isn't necessary at this time," he said. "I'm not 100% sure the Fed will move to cut rates. The markets could be susceptible to a pullback if the Fed does not cut rates."

Following the Fed's cut of the discount-lending window last week, four big banks said they have each borrowed $500 million from the Federal Reserve Bank of New York. Citi(C Quote - Cramer on C - Stock Picks) said it made the move on behalf of unnamed clients, while JPMorgan(JPM Quote - Cramer on JPM - Stock Picks), Bank of America (BAC Quote - Cramer on BAC - Stock Picks) and Wachovia (WB Quote - Cramer on WB - Stock Picks) said they took their loans to demonstrate the value of the Fed as a lender.

There were still signs of turbulence in the financial sector. Lehman Brothers (LEH Quote - Cramer on LEH - Stock Picks) said it is shuttering its subprime lender BNC Mortgage, resulting in the termination of 1,200 positions in 23 locations.

Lehman said it will take an after-tax charge of $25 million and a goodwill write-down of $27 million. The stock finished with a gain of $1, or 1.7%, at $58.54.

Earnings also made headlines. Homebuilder Toll Brothers (TOL Quote - Cramer on TOL - Stock Picks) said third-quarter earnings tumbled 85% from a year ago on writedowns and cancellations. Results still topped Wall Street's expectations, and shares gained $1.06, or 5%, to $22.15.

Mining concern BHP Billiton (BHP Quote - Cramer on BHP - Stock Picks) said income jumped 28% over the last year due to strong commodity prices. BHP also added that it didn't expect to be harmed by the issues in the credit market. BHP ended up $1.99, or 3.5%, to $59.59.

Among ratings change, both UBS and JPMorgan Chase upgraded home-repair retailer Lowe's (LOW Quote - Cramer on LOW - Stock Picks) to buy and overweight, respectively. Lowe's rose 91 cents, or 3.2%, to $29.82.

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