Top 10 News Items 9/29-10/3: Financial Rescue Plan Approved, Markets Tank; Citigroup, Wells Fargo Battle for Wachovia; Buffett Surprises Wall Street with $3B Investment in GE

October 3, 2008 4:10 PM EDT

This is a recap of this week's major news on Wall Street:

1. Following weekend long discussions on Capitol Hill, Wall Street began this week with high hopes. Politicians in Washington had finally agreed on an acceptable rescue plan for the US financial system and the vote Monday would approve the bill, averting a recession and saving the US economy... right? Right? WRONG! The bill was presented to the US House of Representatives and promptly voted down mid-day. Traders were devastated; the Dow Jones tumbled 777 points, making Monday's decline the largest single day slide in the history of the stock market. All was not lost, however. Just after the bill failed, regulators were already considering what could be changed within the legislation in order for House members to pass it. By Thursday, amendments to the plan were proposed and on Friday House members approved the plan and Bush signed it into law. Whew! That was a close one, but everything's okay now... right? Not so fast; immediately following the House's vote, the Dow sunk 210 points and continued lower, eventually closing the week down more than 150 points after being up as much as 284 points earlier in the day.

2. Monday, Citigroup (NYSE: C) announced that it was in advanced talks to purchase the banking assets of Wachovia (NYSE: WB). Throughout the week, the news was pushed to the back-burner amid a frenzy of concerned legislators who were scrambling to propose a more reasonable bailout plan. Talks of a deal re-emerged, surprisingly, on Friday, except Wachovia had found a new suitor willing to pay more: Wells Fargo (NYSE: WFC). Since this announcement, Citigroup has come out demanding that Wells Fargo and Wachovia terminate their deal as Citi claims it had an exclusivity agreement with Wachovia.

3. GE (NYSE: GE), which has recently taken a beating as its GE Capital arm struggles, announced that it would offer $12 billion in common stock along with a special guest investment from none-other-than Warren Buffett's Berkshire Hathaway. Buffett made a $3 billion investment in exchange for perpetual preferred stock with similar terms as his recent deal with Goldman Sachs (NYSE: GS). Interestingly, when asked on CNBC who set up the deal, him or GE, Buffett said it was Goldman that got the two high-profile parties together.

4. Despite the passing of the $700 billion rescue plan, credit markets continued to deteriorate this week. LIBOR, or the London Inter-Bank Offer Rate, rose to its highest level ever when it hit 5.33% on Friday.

5. The Mosaic Company (NYSE: MOS) reported disappointing Q1 earnings after the close Wednesday and also gave concerning production guidance. The report sent the popular ag stocks reeling: shares of Mosaic slid 41%, shares of Potash (NYSE: POT) fell more than 25% and Agrium (NYSE: AGU) also fell more than 20%.

6. Economic indicators this week continued to show signs of an extremely concerning US financial landscape. Initial jobless claims for last week came in at 497,000, compared to the consensus of 475,000, factory orders came in at down 4%, versus the consensus of down 3%, and nonfarm payrolls fell 159,000, compared to the consensus of a 105,000 drop.

7. Con-way Inc. (NYSE: CNW) lowered its FY08 EPS guidance from $3.00-$3.40 to $2.60-$2.80, compared to the consensus of $3.22. The stock fell more than 20% on the news. As a major trucking company in the US, a weak outlook for the company should be alarming to the entire economy.

8. Shares of General Growth Properties (NYSE: GGP) fell about 50% on Thursday after executives sold 2.44 million shares following the stock being added to the no short-sale list. Friday, the company announced that it would suspend its dividend and that its CFO would leave and the stock rallied.

9. Thursday, Ford (NYSE: F) announced its sales for the month of August fell a whopping 34%. Meanwhile, General Motors (NYSE: GM) reported that its car sales during the month declined 16%.

10. Following an evaluation of how the markets performed without shorts being allowed in some 800 financial stocks, the SEC extended their temporary prohibition of short selling until Oct. 17, 2008.

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• Warren Buffett
• Initial Jobless Claims
• Factory Orders
• Nonfarm Payrolls
• Goldman Sachs
• Citi
• Wachovia
• Dividend
• StreetInsider.com Top 10 News Items for the Week
• Layoffs

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