Stock prices were mixed Tuesday after investor Warren Buffett announced he would purchase Burlington Northern Santa Fe Corp. in a deal valued at $44 billion.
The Dow Jones industrial average fell 17.53 points to 9,771.91. The Nasdaq composite index gained 8.12 points to 2,057.32 and the S&P 500 stock index rose 2.53 points to 1,045.41.
Shares of Burlington Northern (NYSE: BNI) rose $20.93 to $97 after it was announced that Buffett would buy the outstanding 78 percent of the company that he doesn't already own through his company, Berkshire Hathaway (NYSE: BRK.A). He said that this deal was an "all-in wager" on the rebounding growth of the U.S. economy.
"When Warren Buffett puts money behind something, people then seem to get on it," said Christopher Sheldon, the Boston- based director of investment strategy at BNY Mellon Wealth Management, which oversees $142 billion globally. "People who are looking at the lackluster jobs growth and the constrained consumer have to look at the other side of this, which is probably what Warren Buffett is doing, which is the outlook for profits."
Investors will now focus on the anticipated announcement from the Federal Reserve about the economy and interest rates. The two-day meeting of the Fed concludes on Wednesday and an announcement is expected at 11:15 a.m. Pacific time. Chairman Ben S. Bernanke is gambling that by March, he can stop the purchases of mortgage-backed securities that have propped up the housing market.
People "are going to be looking for any indication that the Fed is signaling that it's eventually going to pull back on monetary stimulus," said Keith Wirtz, chief investment officer at Fifth Third Asset Management Inc., which oversees $18.6 billion in Cincinnati. "They're going to sit and read through all the words one by one."
Oil prices rose $1.47 to $79.60 a barrel. Weekly inventory data will be released Wednesday. Gold rose to an all-time high at $1,085.59 an ounce.
A group of 10 transportation stocks in the S&P 500 jumped 5.8 percent, the most since April. An index of industrial shares, which includes railroads, rallied 1.4 percent for the biggest advance among 10 industries.
Black & Decker Corp. (NYSE: BDK) surged 31 percent to $62. The maker of DeWalt power drills and Price Pfister faucets agreed to be purchased by Stanley Works (NYSE: SWK) for $3.5 billion in stock. Stanley Works rallied 10 percent to $49.69.
Cognizant Technology Solutions Corp. (Nasdaq: CTSH) added 8.2 percent to $41.97. The computer-services provider to Aetna Inc. (NYSE: AET) and Kimberly-Clark Corp. (NYSE: KMB) said third-quarter profit rose 21 percent as sales increased more than analysts anticipated.
Intel (Nasdaq: INTC), the world's biggest computer-chip maker, slid 2.7 percent to $18.50 as Morgan Stanley reduced its rating on semiconductor stocks and downgraded Intel to "Equal-weight." The brokerage also downgraded Novellus Systems Inc. (Nasdaq: NVLS), which fell 5.2 percent to $19.71.
Gold jumped to a record after India's central bank bought 200 metric tons of the metal from the International Monetary Fund, increasing speculation about more official purchases. Gold futures for December delivery rose to as high as $1,088.50 an ounce in New York, beating the previous record set Oct. 14.
Europe's benchmark index fell 1.2 percent after UBS AG said its third-quarter net loss was 564 million Swiss francs ($552 million), compared with a 283 million-francs profit a year earlier. Analysts surveyed by Bloomberg estimated a loss of 337 million francs on average. UBS shares fell 5.8 percent in Zurich.
European banks also slide after Royal Bank of Scotland Group Plc said it will sell its insurance units and some branches as the lender took an additional 25.5 billion pounds ($41.6 billion) of state aid, making its rescue the worldís most expensive bank bailout.
The Dollar Index, a six-currency gauge of the greenback's strength, added 0.1 percent to 76.369. The Reuters/Jefferies CRB Index of 19 raw materials gained 1.1 percent. The Dollar Index has rebounded 1.9 percent since sliding to a 14-month low on Oct. 21, the same day the gauge of commodities climbed to a one- year high.
Raw-material producers gained 1.2 percent, adding to Monday's 1 percent advance. Newmont Mining Corp. (NYSE: NEM) jumped 6.7 percent after PT Aneka Tambang, Indonesia's second-largest nickel producer, was appointed by the Indonesian government to buy a 14 percent stake in company's local unit.
Owens-Illinois Inc. (NYSE: OI), the world's largest maker of glass containers, and AK Steel Holding Corp. (NYSE: AKS), the fourth-largest U.S.- based steelmaker, each added at least 3.9 percent.
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