Stocks Rally on GM Contract, Buffett’s Interest in Bear Stearns
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American stocks rallied the most in a week after General Motors Corp. agreed on a contract with the United Auto Workers and investors speculated billionaire Warren Buffett will buy a stake in Bear Stearns Cos.
GM climbed to the highest since July after cutting a deal that will allow the largest American automaker to get rid of $50 billion in health-care costs. Bear Stearns, the second-biggest American underwriter of mortgage bonds, jumped the most in six weeks on a New York Times report that Mr. Buffett may provide capital to stem losses from the housing slump.
“Warren Buffett buying a stake in Bear Stearns would be a vote of confidence in the financial sector if it’s true,” the chief investment strategist at Oppenheimer Co., which oversees $60 billion in New York, Michael Metz, said. “It revives hopes of more takeovers and is positive for stocks.”
The Standard & Poor’s 500 Index added 8.21, or 0.5%, to 1,525.42. The Dow Jones Industrial Average gained 99.5, or 0.7%, to 13,878.15. The Nasdaq Composite Index increased 15.58, or 0.6%, to 2,699.03. European and Asian stocks also advanced, while emerging-market shares rose to a record for the second time this week.
American financial shares contributed the most to the advance and posted their steepest gain since the day after the Federal Reserve cut its benchmark interest rate on September 18.
