Wall Street Drifts Downward
08/27/07 - 04:30 PM EDT
Robert Holmes
"What did disappear last week was the thought that the Federal Reserve was going to have to cut rates at their September meeting, although a rate cut still seems likely by year-end," Nolte added.
Though the turmoil in the credit markets has settled somewhat, former Treasury Secretary Lawrence Summers said over the weekend that the risks of a recession are at their highest since the terror attacks on Sept. 11, 2001. Additionally, Summers said, efforts by Congress to restrict lenders Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) and Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks) were badly timed, and that "we should be encouraging them to provide capital in the subprime space." Among equities, Home Depot (HD Quote - Cramer on HD - Stock Picks) will accept $1.8 billion less than the original $10.3 billion planned from three private-equity
companies in a deal for its wholesale distribution business.
According to The Wall Street Journal, the home-repair retailer guaranteed $1 billion of the debt the buyers will take on to complete the transaction. Home Depot climbed 57 cents, or 1.6%, to $35.25.
Other M&A activity was making headlines, as well. Computer maker Gateway (GTW Quote - Cramer on GTW - Stock Picks) will be acquired by Taiwan's Acer in a $710 million deal. The bid values shares of Gateway at a 57% premium to its last closing price. Shares of Gateway soared 50.4% to close at $1.82.
Elsewhere, U.S. Steel (X Quote - Cramer on X - Stock Picks) will purchase Canada's Stelco for $1.04 billion. U.S. Steel dipped 38 cents, or 0.4%, to $93.01.
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