Wall Street Drifts Downward

"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) and Freddie Mac (FRE Quote) were badly timed, and that "we should be encouraging them to provide capital in the subprime space."

Among equities, Home Depot (HD Quote) 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) 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) will purchase Canada's Stelco for $1.04 billion. U.S. Steel dipped 38 cents, or 0.4%, to $93.01.