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 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, MBIA and Financial Guaranty Insurance, known as FGIC.
Word of the offer provided some investors relief, although Buffett said 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.
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 agreed 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,” Croft said.
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’s bid to acquire Yahoo Inc. — an overture that could eventually go hostile. In addition, Research In Motion fell after its BlackBerry e-mail system had an outage.
The dollar was mixed against other major currencies while gold prices fell.
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 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.”
