Bad Day Turns Worse

Regarding Microsoft's prior threats that it would go hostile if Yahoo! didn't accept its original bid, the company decided against that path, believing that Yahoo! would in that case try to make itself unattractive as a buyout target.

On the heels of the news, Yahoo! was downgraded to sell by Citigroup, Soleil Securities and ThinkPanmure. RBC Capital Markets and Stanford Research each slashed their price targets on the stock. Yahoo! shares were plummeting 15% to $24.37. Microsoft investors reacted positively to the development in the early going, though shares of the Dow component ended down 0.6%.

Also having a rough day was Countrywide (CFC Quote), which sank 10.4% a trading day after Bank of America (BAC Quote) disclosed it might not assume part of Countrywide's debt in its deal to take out the struggling mortgage lender.

Friedman Billings cut Countrywide to underperform, saying that BofA should abandon the merger entirely, or at least sharply lower the buyout price. On Friday, Standard & Poor's downgraded Countrywide's credit rating to junk. Dow member BofA was down 2.1%.

Sprint Nextel (S Quote) was one of the winners, after separate reports emerged that it was considering spinning off its Nextel division and that Deutsche Telekom (DT Quote) was mulling a bid for the entire company. Sprint Nextel rose 10.5%.

As for the day's earnings reports, gold miner Goldcorp (GG Quote) topped the consensus profit estimate by 2 cents a share in a quarter that saw gold prices reach record-breaking levels. The company's income soared 84% to $229.5 million, or 32 cents a share. Shares bumped up 2.2%.