Stocks Rise on Buffett Rumor

The Dow climbed 99.5 points today on the strength of the GM settlement and speculation that billionaire Warren Buffett might buy 20% of beleaguered Bear Stearns. The brokerage helped spur the biggest gain in a week, jumping 7.7% after the Buffett story circulated. Said a trader, “You can’t go wrong with a guy like that behind you.” GM surged 9.4% after settling its contract with the UAW, Bloomberg reports.

The Dow closed up 0.7% at 13,878.72, the Nasdaq added 15.58 to reach 2,699.03 and the S&P gained 8.21 to 1,525.42. Financial stocks led the advance, racking up their biggest gain since the day after the Fed rate cut. An unexpectedly large decrease in demand for American goods—at 4.9% the biggest drop in 7 months—renewed expectations that the Fed would cut rates again. (More Bear Stearns stories.)