For the second time in just over a week, Berkshire Hathaway has moved to shore up a company long known for its ironclad fiscal health. Buffett's company invested $5 billion in Goldman Sachs last week after the famed investment bank's shares had slumped. Investors feared Goldman could face similar funding squeezes as Bear Stearns and Lehman Brothers.
For GE, the cash infusion marks another dramatic turn in a turbulent 2008. The company, which makes everything from light bulbs to jet engines and owns NBC Universal, has cut its earnings forecast twice since April due to problems with its financing unit, GE Capital. It has also announced a reorganization and unveiled plans to spin off or sell its famed appliances unit.
The stock has fallen 42 percent in the past year.
Buffett, after announcing his investment on Wednesday, praised Fairfield, Conn.-based, General Electric.
''GE is the symbol of American business to the world,'' he said in a statement. ''They have strong global brands and businesses. I am confident that GE will continue to be successful in the years to come.''
Analysts said Buffett's endorsement will mean as much or even more than Berkshire's cash.
''He's a smart guy and he wouldn't get involved if he doesn't think it's a great company,'' said analyst Mike McGarr of Becker Capital in Portland, Ore.
Berkshire, which in Utah owns RC Willey and Rocky Mountain Power, is buying $3 billion of preferred shares of GE, which carry a 10 percent dividend. The terms are similar to those Buffett struck with Goldman Sachs. Berkshire also has the option to buy $3 billion worth of GE common shares for $22.25 each at any time over five years. GE's shares closed at $24.50 Wednesday.
The company also said it plans to sell at least $12 billion worth of common stock to the public.
Buffett's move was welcomed on Wall Street, where the financial markets trudged through an uneasy session as investors anxiously awaited word on the banking bailout plan, which the Senate later passed. They also digested news that manufacturing contracted in September at the fastest pace since 2001 as the credit crisis spread beyond Wall Street.
After two dizzying days, Wall Street fell only moderately, even as the credit markets still showed signs of strain. The Dow Jones industrials zigzagged during the session, losing more than 200 points in early trading but closing down about 20.
The Commerce Department also reported that construction activity was unchanged in August, although spending for residential projects saw its first increase in 17 months, a welcome upturn amid the housing downturn.
Related developments
* The London Interbank Offered Rate, or Libor, on overnight dollar loans dropped to 3.79 percent on Wednesday from Tuesday's record 6.88 percent. Libor measures how much banks are charging one another to borrow. Many consumer lending rates, including about half of all U.S. adjustable-rate mortgages, are tied to Libor.
* Demand for the safety of government debt increased. The yield on the three-month T-bill, the safest type of investment, fell to 0.79 percent from 0.88 percent. The decline in yields indicates that investors are willing to accept even modest returns to protect their money.
* Delta Air Lines Inc. led a rally in airline shares as crude-oil prices fell below $100 a barrel, spurring hope that lower fuel costs may boost earnings. Delta shares rose about 15 percent, American was up 13 percent, and United added 8.3 percent.
* Ireland's decision to guarantee every penny of depositor's money and debts owed by Irish-owned banks was hailed by some economists as a psychological masterstroke in the banking crisis that other countries will emulate. But European neighbors complained the move only weakened confidence in their more modestly insured banks.
