Deals have slowed down with the decline of the economy, and the government is close to exasperating its one card -- lowering interest rates -- to stimulate a recovery and possibly more deals. After the Fed expectedly lowered interest rates by .25 points Wednesday afternoon, investors pulled back as the markets went from a smile to a frown finishing in negative territory. Deal Stocks such as Citigroup Inc. [C], Time Warner Inc. [TWX] and Sirius Satellite Radio Holdings Inc. [SIRI] all had rough days, signaling that tougher times are still to come. Overall, the Dow closed down 11.81, or .09%, to 12,820.13, and the Nasdaq fell 13.30, or .55%, to 2,412.80.
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Citigroup finished down $1.05, or 3.99%, to $25.27 as the bank sold $4.5 billion in stock, 50% more than it originally planned. The New York-based bank resorted to the stock sale to raise more capital to cover its increasing losses. Although Citi was able to raise more capital, investors are now questioning whether the bank could be a possible merger candidate.
Meanwhile, Time Warner closed down 42 cents, or 2.75%, to $12.85 following its announcement that it will separate its cable division from its media and publishing assets. Time Warner says the move will bring more value to both divisions. The next question for Time Warner is what it will do with its America Online unit.
Finally, investors will have to wait even longer for the anticipated closing date of the merger between Sirius Satellite Radio and XM Satellite Radio Holdings Inc. The two companies pushed back the merger agreement another two weeks to May 15. Investors weren't happy as Sirius fell 13 cents, or 4.81%, to $2.57. The deal is still awaiting approval from the FCC, which hasn't formally put the merger on its May agenda, meaning another extension is possible. - Gerald Magpily
