Stocks Rise, Wachovia Pulls a Fast One
In a couple of hours, the House will vote on the revised bailout bill passed in the Senate Wednesday night. The stock market is extremely hopeful that this will go through, and as a result stocks are on the rise — rather dramatically — this morning.
Weak jobs data is one of the catalysts behind the stock market boost. If this seems counter-intuitive, that’s because the recent financial crisis has changed a lot of the rules. Indeed, the fact that the jobs data is so weak is one of the reasons that the stock market is banking on the House passing this new version of the bailout bill. Investors are counting on the fact that this close to the election Congresspeople will want to be seen doing “something” for the economy that helps Main Street.
Wachovia disses Citi and turns to Wells Fargo
The next bit of news causing a stir on Wall Street is the news that Wachovia has decided to reject its recent negotiations with Citi and the FDIC. Wells Fargo has decided to buy Wachovia whole and intact, and for about $7 per share. This new deal was very straightforward, and Wachovia approved it almost immediately. The New York Times reports on the Wells Fargo and Wachovia deal:
“This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support,” Wachovia’s chief executive, Robert K. Steel, said in a statement. “The market presence and composition of our businesses, along with our service-oriented cultures, are extraordinarily complementary and this combination creates great potential for sustained stability and growth.”
The agreement, the chairman of Wells Fargo, Richard M. Kovacevich, said, “provides superior value compared to the previous offer to acquire only the banking operations of the company and because Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo that will be one of the world’s great financial services companies.”
This is an interesting move, as Wells Fargo is a California-based company. This could signal a beginning to a shift of the country’s banking center from the east coast to the west coast.
Wachovia shares are up on news of the deal.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
Tags: stock market, stock market news, investing blog, Wachovia,
economy, investments, Wells Fargo
