US stocks rose slightly on Monday as the transport sector rallied after Warren Buffett acquired a stake in three railroad companies and government data showed strong job growth last month.
The US stock market reacted for the first time to Friday's news from the Labour Department that US employers added 180,000 new jobs in March, implying the economy remains resilient despite a slowdown in housing. The market was closed on Good Friday.
Shares of Burlington Northern Santa Fe Corp jumped after Warren Buffett's Berkshire Hathaway Inc said it acquired a 10.9 percent stake in the railroad company to become its largest shareholder. Buffett's company also bought stakes in two other rail companies. The Dow Jones Transportation Average, which includes Burlington Northern's stock, was up 2.5 percent.
"The jobs data last Friday was better than expected, and you've got a lot of activity in the rail section as a result of Buffett's move. It's really moved the transports sharply higher. Everything else is kind of treading water, and I think people are waiting for some of the earnings reports to trickle out," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco.
The Dow Jones industrial average was up 26.73 points, or 0.21 percent, at 12,586.93. The Standard & Poor's 500 Index was up 3.47 points, or 0.24 percent, at 1,447.23. The Nasdaq Composite Index was up 3.83 points, or 0.16 percent, at 2,475.17.
Burlington's shares rose 8.9 percent to $90.07. An S&P index of railroad companies' stocks gained 5.6 percent. Wall Street's enthusiasm was kept in check, however, by concerns about earnings growth. The first major financial reports begin later this week, and expectations for profit growth by Standard & Poor's 500 companies fell to an increase of 5.0 percent compared with a year ago from an estimated growth rate of 9.2 percent when the quarter began, according to a Reuters Estimates survey.
Alcoa Inc, the biggest US aluminium producer, will be the first Dow component to report quarterly earnings, when it releases its results on Tuesday. Alcoa's stock was up 1.3 percent at $35.05. Last week, Credit Suisse cut its first-quarter earnings estimate for Alcoa and rival Alcan Inc, partly due to lower aluminium prices.
A warning from chip maker Advanced Micro Devices> underscored investors' concern about the reporting season. AMD said it expects to report first-quarter revenue below Wall Street's forecasts. But the company also unveiled a restructuring plan to cut costs, which lifted its stock. However, Goldman Sachs cut its price target on AMD's stock.
AMD shares were up 5 percent at $13.49 on the NYSE. American Home Mortgage Investment Corp sank after it warned it expects lower income than previously forecast. Other housing-related shares fell, including Wachovia Corp, Wells Fargo & Co and Washington Mutual Inc, all major mortgage lenders.
American Home Mortgage shares slumped 16.2 percent to $21.65. Wachovia's stock fell 0.75 percent to $54.07, Wells Fargo lost 0.32 percent to $34.33 and Washington Mutual dropped 1.4 percent to $39.26.
On the deal-making front, a consortium of Middle Eastern investors and American buyout firms is preparing a $50 billion approach for Dow Chemical Co in what could be the world's biggest leveraged buyout, according to the UK newspaper Sunday Express. Dow Chemical's stock was up 4.4 percent at $46.41 on the New York Stock Exchange.
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