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 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 gave some investors relief, although Buffett says a deal would back only municipal bonds, 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.
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."
For the day, the Dow rose 133.40, or 1.09 percent, to 12,373.41, after being up more than 200 points earlier in the session.
Broader stock indicators were mixed. The Standard & Poor's 500 index advanced 9.73, or 0.73 percent, to 1,348.86, and the Nasdaq composite index edged down 0.02 to 2,320.04.