September 24, 2008 / 1:17 PM / 10 years ago

US STOCKS-Market points up after Buffett's Goldman investment

* Buffett investment in Goldman helps futures

* Bernanke, Paulson return to Capitol Hill on bailout

* Data on existing-home sales, energy inventories on tap (Recasts first paragraph, updates prices)

By Ellis Mnyandu

NEW YORK, Sept 24 (Reuters) - U.S. stocks headed for a higher open on Wednesday after Warren Buffett made a $5 billion investment in Goldman Sachs Group Inc (GS.N) late on Tuesday, buoying sentiment in the beleaguered financial sector.

Additionally, Japan’s No. 3 bank, Sumitomo Mitsui Financial Group (8316.T), plans to invest in Goldman Sachs, Japanese media said, in what would be the third big Japanese investment this week on Wall Street.

Before the bell, shares of Goldman Sachs jumped nearly 5 percent to $130.85, while rival Morgan Stanley (MS.N) rose 4.6 percent to $29.30. JPMorgan Chase (JPM.N), the No. 3 U.S. bank, were up 2.3 percent at $41.48.

A rise on Wall Street would help reverse the worst two-day slide in six years.

But even as the Goldman Sachs news suggested confidence, investors worried congressional wrangling could delay or weaken the proposed $700 billion plan to rescue the financial sector, increasing unease about the struggling U.S. economy.

In another worrying sign for investors, the interbank cost of borrowing three-month money in London jumped on Wednesday, indicating banks are still reluctant to lend.

“When one of the highly respected value investors puts up that amount of money it suggests, on the surface, that when Buffett jumps in the pool others may follow,” said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. “That says to investors that all is not lost.”

S&P 500 futures SPc1 rose 10 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 climbed 74 points and Nasdaq 100 NDc1 futures gained 20.75 points.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson on Tuesday urged Congress to approve the financial sector bailout quickly, warning that a delay would put the economy at risk.

But lawmakers raised objections, saying the legislation could hand taxpayers a huge bill and still lacked detail.

Bernanke is due to testify on the economic outlook before a joint congressional committee at 10 a.m. (1400 GMT), and again with Paulson before a House panel on the bailout legislation at 2:30 p.m. (1830 GMT).

A report on August existing home sales is due at 10 a.m. (1430 GMT), while weekly energy inventories data is scheduled for release at 10:35 a.m. (1435 GMT). (Editing by Kenneth Barry)

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