WALL STREET: Stocks ended down after a volatile session as traders tried balance a drop in oil and renewed hopes for a Yahoo deal against fears over lenders; Fannie Mae fell 16% and Freddie Mac shed 18% as a research note from Lehman Brothers saw investors worry the lenders would have to raise capital because of higher requirements for loss reserves under a new accounting rule. Marshall & Isley slid 12% as further deterioration in the housing market prompted the Milwaukee bank to bump up its provision for loan losses.
Worries of similar pressures hurt other banks and mortgage lenders; Annaly Capital Management shed 5.6%, Washington Mutual fell 4.7%, Wachovia slid 6.7%. Share of broker dealer Lehman Brothers were down 8.8%. A fall in oil prices helped technology and consumer-discretionary stocks recover many of their losses in afternoon trading; Yahoo surged 12% after Microsoft said it's interested in making another run at a merger with the Internet concern if Carl Icahn succeeds in replacing the Yahoo board. General Motors rose 1.2% after the auto giant said it plans to cut thousands more white-collar employees, and may sell some of its brands. BCE rose 11% after a consortium of banks and leveraged buyout firms salvaged a $52 billion takeout deal for the Canadian telephone company. The oil sell off dragged down the energy sector; among oil-and-gas drillers Range Resources fell 3.9%, Devon Energy slid 5.8%. Dow closed down 0.5%, Nasdaq down 0.1%, Philly Semicons +0.6%.
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