Stocks rose soundly Wednesday following word that some of the problems dogging big companies like General Motors Corp. and Bear Stearns Cos. could be on the mend.
GM, one of the 30 stocks that makes up the Dow Jones industrial average, led the market higher from the outset Wednesday with word 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 onto 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 the session with a report that billionaire investor Warren Buffett was a potential suitor.
Wall Street shrugged off broader economic news from the Commerce Department, which said demand for durable goods fell in August by the largest amount in seven months. The findings could indicate that recent upheaval in the credit and stock markets as well as the housing sector dented the economy.
The report followed data released Tuesday showing that existing home sales stalled in August and consumer confidence fell in September.
However, Wall Street often regards such readings as good news because it could pressure the Federal Reserve to lower interest rates again when it meets next month. The central bank last week surprised Wall Street with a larger-than-expected half-point cut in rates — its first in four years — and sent stocks surging.
According to preliminary calculations, the Dow Jones industrial average rose 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.
The Russell 2000 index of smaller companies rose 6.12, or 0.76 percent, to 809.12.
Treasury prices turned higher Wednesday after there was surprisingly strong investor demand in a government sale of $18 billion in new 2-year Treasurys. The yield on the benchmark 10-year Treasury note fell to 4.62 percent from 4.64 percent at Tuesday’s close. Prices and yields move in opposite directions.
The dollar recovered slightly against major currencies Wednesday despite lackluster economic data, but not before hitting another record low against the euro. Gold prices fell.
Oil futures ended higher Wednesday, closing above $80 a barrel as a turbulent day ended with a late rally led by investors who saw an early price dip as a buying opportunity.
In addition to corporate and economic news, some of the session’s gains could owe to the approaching end of the quarter.
“I do think what you’re seeing here is because we had such a big turnaround from August into September, the quarter is ending on a positive note. As you get closer to the end in the next couple of days, you could get some window dressing,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald, referring to some investors’ plans to buy stocks to shore up their end-of-the-quarter holdings.
In corporate news, GM jumped $3.22, or 9.4 percent, to $37.64 after workers agreed to return to their jobs after a two-day nationwide strike. GM was by far the biggest advancer among the Dow stocks. The deal would allow GM to shed some of its costs and have the union oversee management of retiree health care.
Bear Stearns, which had been higher through the session amid rumors it would sell off a piece of the company. The nation’s fifth-largest investment bank doubled its gains after The New York Times reported Buffett, among others, had shown interest in a minority stake in the company. The stock finished up $8.76, or 7.7 percent, at $123.
In other corporate news, technology stocks showed gains Wednesday after Red Hat Inc., a maker of open-source software, reported its fiscal second-quarter profit rose sharply and that its revenue came in ahead of Wall Street’s expectations. Red Hat advanced $1, or 5.3 percent, to $19.89.
Tech stocks have done well in recent sessions in part based on the notion that a slowing economy and even a retrenchment in consumer spending could spare some technology companies and consumer technology names, said Pado.
“My expectation is that they are going to buy fewer things but maybe at greater cost,” he said, referring to consumers looking at technology for the coming holiday season.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.29 billion shares compared with 1.33 billion shares traded Tuesday.
Overseas, Britain’s FTSE 100 closed up 0.56 percent, Germany’s DAX index rose 0.45 percent, and France’s CAC-40 rose 0.87 percent. In Asia, Japan’s Nikkei index closed up 0.21 percent and Hong Kong’s Hang Seng Index fell 0.46 percent.