New York – Stocks rose soundly Wednesday following word that some of the problems dogging big companies such as General Motors Corp. and Bear Stearns Cos. could be on the mend.
GM, one of the 30 stocks that make up the Dow Jones industrial average, led the market higher from the outset with news it had struck a tentative contract agreement with the United Auto Workers that could allow the company to shed some of its burdensome health-care costs.
While stocks held on to gains throughout the session, rumors that Bear Stearns Cos. would sell a stake in the company took on new urgency in the final hour of trading with a report that billionaire investor Warren Buffett was a potential suitor.
“Certainly it’s good to have problems that have been overhanging Bear Stearns off the table, if that can be done. That should help the financials,” said William Rutherford, president of Rutherford Investment Management in Portland, Ore., referring to the recent failure of two Bear Stearns hedge funds.
“It takes a lot of risk out of Bear Stearns stock. It doesn’t mean that the fears that investors had yesterday were misplaced. It just means there is a new piece of information to be considered,” he said of any interest Buffett might show.
The GM and Bear Stearns news lifted investor sentiment, sending the Dow up 99.50, or 0.72 percent, to 13,878.15.
Broader stock indicators also rose. The Standard & Poor’s 500 index advanced 8.21, or 0.54 percent, to 1,525.42, and the Nasdaq composite index increased 15.58, or 0.58 percent, to 2,699.03.
