Investors emboldened by
Kerkorian’s GM bid

NEW YORK » Stocks skipped higher yesterday as investors were emboldened by decent earnings, a handful of mergers and billionaire investor Kirk Kerkorian's bid to substantially add to his stake in General Motors Corp. The Dow Jones industrials soared more than 125 points.

Wall Street enjoyed a broad rally as investors shrugged off some of the worries that have dogged stocks in recent weeks. The possible return of the 30-year bond was the biggest news of the day, but analysts said what really lured stock buyers back from the sidelines was Kerkorian's commitment to troubled automaker GM. Considered a smart value investor, Kerkorian's unexpected move may have restored some faith in the market, which ultimately could turn sentiment around.

"It kind of surprised everyone that someone as savvy as him would talk about increasing his stake in a beleaguered company. It suggested that there is value in this market," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "On the days the stock market reverses or changes direction, it's often hard, historically, to find a reason why, on that day. I used to say the market seems to reach magical moments, and this may very well be one of those magical moments, where the configuration of events is just enough to get investors back on the bandwagon."

The Dow closed up 127.69, or 1.2 percent, at 10,384.64, largely thanks to the 18 percent rise in GM's share price.

Broader stock indicators were also higher. The Standard & Poor's 500 index gained 14.48, or 1.25 percent, to 1,175.65. The Nasdaq composite index rose 29.16, or 1.5 percent, to 1,962.23.

The announcement that the government is considering bringing back the 30-year Treasury rattled the bond market, sending the yield on the 10-year note to 4.19 percent, up from 4.17 percent late Tuesday. Prices of the existing 30-year Treasury also sank. The 30-year note, discontinued in 2001 at a time of government surplus, could provide important financing in an era of record budget deficits; a decision is expected in August.

The U.S. dollar fell yesterday against other major currencies in European trading; gold prices rose. Oil futures rebounded from earlier lows, rising 63 cents to settle at $50.13 per barrel on the New York Mercantile Exchange after a weekly government report showed rising supplies of crude oil and gasoline.

GM soared $5.03 to $32.80 after Kerkorian's Tracinda Corp. offered to pay about $870 million for a nearly 5 percent stake in the automaker, a deal that would boost the billionaire's stake to nearly 9 percent. Kerkorian is seeking to purchase 28 million shares at $31 apiece.