Barclays of Britain agreesto purchase Lehman Brothers
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Two days after walking away from a deal to purchase all of Lehman Brothers, Barclays PLC said Tuesday it had agreed to acquire Lehman's North American investment banking and capital markets businesses for $250 million in cash. The British bank will also purchase Lehman's New York headquarters and its two data centers in New Jersey for $1.5 billion. Lehman's parent company Lehman Brothers Holdings Inc.'s filed for bankruptcy protection on Monday after it was unable to find financing or fresh capital to shore up its balance sheet amid a continued downturn in the credit markets. The deals require approval from the bankruptcy court.
Goldman Sachs' slump is worst since '99
Goldman Sachs Group Inc., the larger of the nation's two remaining major independent investment banks, on Tuesday reported its worst slump in profits since going public in 1999. The world's largest investment bank reported third-quarter profit plunged 71 percent from the year-ago period, an almost unthinkable drop for a firm widely described as the smartest on Wall Street. Goldman's results reflect continuing damage from the ongoing credit crisis that has already vanquished three of its rivals.
Morgan Stanley reassures investors
Morgan Stanley said Tuesday that its core businesses continue to generate solid profits, as the No. 2 investment bank hurried to convince investors that it is withstanding the financial turmoil that has dramatically changed the face of Wall Street over the past few days. Although its fiscal third-quarter profit slipped 7 percent, the result surpassed Wall Street's expectations. Morgan Stanley reported strong performance in its core prime brokerage, commodities and equities businesses.
WaMu, Wachovia shares recover
Shares of troubled banks Washington Mutual Inc. and Wachovia Corp. recovered on Tuesday as investors grew hopeful that American International Group Inc. would receive much-needed funding. WaMu shares jumped 32 cents, or 16 percent, to $2.32 after hitting a low of $1.50 and a high of $2.70 earlier in the session. The stock had shed 27 percent on Monday. Wachovia shares gained 80 cents, or 7.5 percent, to $11.51 after falling 25 percent in the previous session.
Oil prices continue slide
Oil prices extended their retreat Tuesday, shedding $10 a barrel in a violent, two-day slide as tumult on Wall Street dims hopes for a swift economic recovery and signals another drop in U.S. energy demand. Crude, which shot up near $150 a barrel only two months ago, is now down 8 percent for the year. Meanwhile, gas prices edged higher at the pump, topping $3.85 a gallon amid the aftermath of Hurricane Ike. However, given crude's continuing slide, retail gas was expected to turn lower within a few weeks.
Consumer prices dip for August
Consumer prices in August posted the first monthly decline in nearly two years as Americans finally got some relief from surging energy prices. But the cost of food and clothing still rose last month, and wages over the past year are down. Consumer prices edged down 0.1 percent last month, the Labor Department reported Tuesday, a significant improvement from a 1.1 percent price spike in June and a 0.8 percent rise in July.
Compiled from Staff, wire reports