Wall Street finished mostly higher Tuesday after billionaire investor Warren Buffett offered to help out troubled bond insurers, easing...
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 133.40 to 12,373.41. The blue-chip index was up more than 200 points earlier in the session.
Microsoft, one of the 30 Dow stocks, added 13 cents to close at $28.34 a share. Boeing, also a Dow stock, gained $2.43 to $83.56.
Broader stock indicators were mixed. The Standard & Poor’s 500 index advanced 9.73 to 1,348.86, and the Nasdaq composite index edged down 0.02 to 2,320.04.
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In an interview on CNBC, Buffett said his Berkshire Hathaway 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, MBIA and FGIC.
Word of the offer gave some investors relief, although Buffett says a deal would back only municipal bonds and 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.
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 3.61 percent late Monday.
Investors should be careful not to read too much into the market’s advance, said Len Blum, managing director of Westwood Capital. He noted that recent readings on U.S. retail spending show that Americans are hurting financially.
“Stock markets will have good days in bear markets,” he said, adding that he thinks more problems will be uncovered in the financial sector. “We haven’t seen all the losses. Even if you have some investors willing to bottom-fish, or very sophisticated investors like Warren Buffett willing to invest at this point, the financial sector is still really sick.”