Russell 2000 heads higher
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are rising on news of a narrower-than-expected loss at General Motors Corp. (NYSE: GM) and financial relief.
At 10:16 a.m. ET, the small-cap index had advanced 8.54 points, or 1.22%, to 708.29. The Dow Jones Industrial Average (INDU) had added 192.33 points, or 1.57%, to 12,432.34.
Stocks small and large climbed out of the gate following news that GM swung to a fourth-quarter net loss that was not as bad as the one predicted by analysts. The Detroit-based carmaker also announced that it will offer buyouts or early retirements to all the 74,000 U.S. hourly workers represented by the United Auto Workers union in order to cut down on costs.
Helping the bulls gain traction is news that billionaire investor Warren Buffett has offered to have his company, Berkshire Hathaway, assume responsibility for $800 billion of municipal bonds guaranteed by bond insurers MBIA Inc. (NYSE: MBI), Ambac Financial Group Inc. (NYSE: ABK) and Financial Guaranty Insurance Co.
There are fears that the three companies could be downgraded due to writedowns stemming from the subprime mess. A downgrade would make it difficult to find clients and would lower the value of many of the bonds that it insures, causing more write-offs at banks and other financial institutions.
One of the three bond insurers has turned down the offer while the other two are still thinking it over, but investors are nevertheless in a buying mood.
Posting a solid gain is Evercore Partners Inc. (NYSE: EVR), a small-cap investment banking company that reported fourth-quarter earnings above Wall Street’s expectations.
On the flip side, Cynosure Inc. (Nasdaq: CYNO) reported fourth-quarter net income that disappointed analysts despite the fact that it was 300% better than a year ago. The maker of light-based aesthetic and medical treatment systems also said that revenues jumped 49%.
General retailer 99 Cents Only Stores (NYSE: NDN) barely beat analysts’ third-quarter earnings projections.
