Stocks rise after Buffett makes offer
NEW YORK – Wall Street finished mostly higher Tuesday after billionaire investor Warren Buffett offered to help out troubled bond insurers, easing some of the market’s concerns about further deterioration in the credit markets. The Dow Jones industrials rose more than 130 points.
In an interview on CNBC, Buffett said his Berkshire Hathaway Inc. holding company has offered a second level of insurance on up to $800 billion in municipal bonds. The reinsurance offer is for bond insurers Ambac Financial Group Inc., MBIA Inc. and Financial Guaranty Insurance Co., known as FGIC.
Word of the offer gave some investors relief although Buffett said a deal would back only municipal bonds, not the risky and complicated financial instruments that many see as more likely to have problems. Still, further assurances on the soundness of municipal bonds could help shore up Wall Street’s confidence and reinforce the differences in quality among various levels of debt.
The Dow rose 133.40, or 1.09 percent, to 12,373.41. The blue chip index was up more than 200 points earlier in the session. The Standard & Poor’s 500 index advanced 9.73, or 0.73 percent, to 1,348.86. However, the Nasdaq composite index edged down 0.02, or less than 0.01 percent, to 2,320.04.
Tech stocks fell in the last hour of trading amid uncertainty about Microsoft Corp.’s bid to acquire Yahoo Inc. – an overture that could eventually go hostile. Yahoo fell 30 cents to $29.57 after the search engine’s board rejected Microsoft’s $44.6 billion bid; Microsoft’s shares rose 13 cents to $28.34.
Research In Motion Ltd. fell after its Blackberry e-mail system had an outage.
Bond prices fell Tuesday after Buffett’s announcement. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.67 percent from 3.62 percent late Monday.
Overseas, Japan’s Nikkei stock average inched up 0.04 percent and Hong Kong’s Hang Seng index advanced 1.35 percent. Britain’s FTSE 100 rose 3.54 percent and Germany’s DAX index rose 3.33 percent. France’s CAC-40 closed up 3.37 percent.