Stocks Unchanged at Midday

12:00p ET September 24, 2008 (Briefing.com) – Stocks have been unable to find direction as market participants digest news that one of the world’s most respected investors bought preferred stock in Goldman Sachs, testimony from Fed Chairman Bernanke, and continued tightness of credit markets. At midday, the stock market is near the unchanged mark, as it has been through most the session. Seven of the ten economic sectors are posting a loss,

with notable weakness in industrials (-1.5%) and utilities (-1.0%). The financial sector is down 0.2%. Tech is outperforming (+0.9%), which is helping the Nasdaq to post a modest gain. Warren Buffett’s Berkshire Hathaway (BRK.A 133,050, +4,250) bought $5 billion perpetual preferred stock yielding 10% from Goldman Sachs (GS 128.68, +3.63). Berkshire will also receive warrants to purchase $5 billion of GS common stock at a strike price of $115, exercisable anytime over five years. The deal is already profitable for Berkshire at the current price of GS. In addition, Goldman priced a $5.0 billion common stock public offering at $123 per share. The market originally cheered the news, sending futures sharply higher, but some enthusiasm faded on the recognition that Buffet’s purchase was opportunistic in nature. Buffett said on CNBC that he wrote the check because it was the right price, and he is making the deal because he believes the government will intervene to stabilize the financial markets. The Treasury’s proposal to buy up to $700 billion in illiquid assets from financial institutions remains in focus, with Fed Chairman Bernanke currently appearing before the Joint Economic Committee. Bernanke emphasized that the stabilization of our financial system is key for the U.S. economic recovery, urging Congress to act quickly.