NEW YORK, Feb 12 (Reuters) - U.S. stock index futures headed for a sharply higher open on Tuesday after Warren Buffett told CNBC television that Berkshire Hathaway offered to take over liabilities for struggling monoline bond insurers.
Buffett said the offer, which he extended to bond insurers MBIA (MBI.N: Quote, Profile, Research), Ambac (ABK.N: Quote, Profile, Research) and FGIC, would cover $800 billion in municipal bonds. For details, see [ID:nWEN3903].
Futures jumped to session highs after comments by the billionaire investor. They were set to extend Monday's rebound from the previous week's steep losses.
"Warren heading to the rescue here for the muni bond business -- that gets people excited and that's why we're rallying," said Peter Boockvar, equity strategist, Miller Tabak & Co., New York.
"There's nothing any deeper than that. The CDO exposure is obviously not going away. Buffett wouldn't touch that stuff. He's trying to help the business that is extremely profitable."
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"เมื่อคุณเริ่มทำสิ่งที่รักแล้ว วันต่อๆไปก็จะไม่ใช่การทำงาน"..Brian Tracy state exact goal/then analyze what fail the goal/then act/if you don't start/dream still be a dream
หุ้นไม่ใช่แค่เศษกระดาษ มันมีคนทำงานจริง
Buffett said the offer, which he extended to bond insurers MBIA (MBI.N: Quote, Profile, Research), Ambac (ABK.N: Quote, Profile, Research) and FGIC, would cover $800 billion in municipal bonds. For details, see [ID:nWEN3903].
Stocks Rally on Buffett, GM News
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By THE ASSOCIATED PRESS
Published: February 12, 2008
Filed at 12:09 p.m. ET
NEW YORK (AP) -- Wall Street surged 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 about 200 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 gives some investors relief although Buffett says a deal would only back municipal bonds, and not the risky and complicated financial instruments that many see as more likely to have problems. Still, offering investors 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.
General Motors Corp. appeared to please investors with a fresh round of buyouts to all 74,000 of its U.S. hourly workers represented by the United Auto Workers. The company also reported losses of $38.7 billion in 2007, the largest annual loss for an automotive company.
Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore, said Buffett's move gives the market a bit of needed confidence.
''It's a good thing to see,'' he said. He also agrees with Buffett's assessment that stocks are mostly fairly valued. ''We could definitely test some more lows going forward but there was a pretty good drop-off there again and I think people are trying to take advantage of it to get some quality stocks at cheaper prices.''
But some analysts were cautious.
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 believes 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 Buffet willing to invest at this point, the financial sector is still really sick.''
In midday trading, the Dow rose 199.40, or 1.63 percent, to 12,438.93.
Broader stock indicators also moved higher. The Standard & Poor's 500 index advanced 18.312, or 1.37 percent, to 1,357.44, and the Nasdaq composite index rose 23.15, or 1 percent, to 2,343.12.
Stocks' gains come a day after Wall Street finished moderately higher. Monday's session followed sharp losses last week.
Bond prices fell Tuesday after Buffett's announcement. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.63 percent late Monday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 87 cents to $92.72 per barrel on the New York Mercantile Exchange.
Buffett's overture to the big bond insurers reassured investors. Buffett said one firm rejected his offer and he is still waiting to hear from the other two.
Bond insurers write policies that promise to cover payments to bondholders if the entity that issued the bonds defaults. Reinsurance provides a second level of insurance on those bonds.
Investors also appeared pleased Tuesday by a plan by the six largest mortgage lenders to help at-risk borrowers with all types of mortgages retain their homes. The plan, called Project Lifeline, is expected to be announced Tuesday by the Treasury Department and the Department of Housing and Urban Development, a person familiar with the plan told The Associated Press. The person confirmed earlier news reports about the plan but spoke on condition of anonymity because it had not yet been made public.
Adding to investors' more upbeat mood, Credit Suisse Group sharply reduced its estimate of how much exposure it has to subprime mortgage debt. Switzerland's second largest bank said its debt tied to subprime mortgages, those given to borrowers with poor credit, fell to 1.6 billion francs ($1.45 billion) from 3.9 billion francs at the end of September. Its fourth-quarter net profit fell 72 percent because of write-downs. The stock rose $1.17 to $52.
GM rose 46 cents to $27.58 after reporting its fourth-quarter loss totaled $722 million, or $1.28 per share, in the fourth quarter, compared with net income of $950 million a year earlier. Much of the loss relates to $622 million in costs tied to a restructuring at Delphi Corp., GM's former parts business.
Diversified manufacturer 3M said late Monday it would pay a quarterly dividend of 50 cents, an increase of 4.2 percent over its previous payout. The decision by 3M, which makes products such as Scotch tape and Post-It notes, to boost its dividend is welcome news for investors amid a time of economic uncertainty. 3M rose 26 cents to $79.51.
Advancing issues outnumbered decliners by almost 3 to 1 on the New York Stock Exchange, where volume came to 521.6 million shares.
The Russell 2000 index of smaller companies rose 10.18, or 1.45 percent, to 709.83.
Overseas, Japan's Nikkei stock average closed up 0.04 percent and Hong Kong's Hang Seng index rose 1.35 percent. In afternoon trading, 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.
Stocks on Wall Street surged after Buffett discussed a few details of his offer to three companies to reinsure about $800 billion of their municipal bonds in an interview on CNBC, but two of the bond insurers have rejected the deal and analysts said it appeared unlikely.
CK เขียน:$800 billion ยังโดนปฏิเสธเลยครับ สองในสามปฏิเสธไปแล้ว
Stocks on Wall Street surged after Buffett discussed a few details of his offer to three companies to reinsure about $800 billion of their municipal bonds in an interview on CNBC, but two of the bond insurers have rejected the deal and analysts said it appeared unlikely.
^
"เมื่อคุณเริ่มทำสิ่งที่รักแล้ว วันต่อๆไปก็จะไม่ใช่การทำงาน"..Brian Tracy state exact goal/then analyze what fail the goal/then act/if you don't start/dream still be a dream
หุ้นไม่ใช่แค่เศษกระดาษ มันมีคนทำงานจริง
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