Buffet's bet leads to cheer on WallSt

The Standard and Poor&rsquo;s 500 and Nasdaq rose slightly yesterday as news of a major railroad acquisition helped sentiment, but the Dow edged lower on caution before a Federal Reserve statement on interest rates and the economy.<br /><br />Morgan Stanley&rsquo;s downgrade of semiconductor stocks also limited a broad advance.<br /><br />The Dow Jones Transportation Average rose 5.3 per cent as Warren Buffett&rsquo;s Berkshire Hathaway agreed to buy Burlington Northern Santa Fe Corp in a deal that values the railroad company at $34 billion, Berkshire&rsquo;s biggest deal ever. Burlington shares jumped 27.5 percent to $97. <br /><br />&ldquo;One of the themes we&rsquo;ve been pointing toward is that the next catalyst after earnings is M&amp;A activity, and we've had some big ones,&rdquo;said Tim Smalls, head of US stock trading at brokerage firm Execution LLC in Greenwich, Connecticut. &ldquo;People consider companies to be cheap.&rdquo;<br /><br />The Federal Open Market Committee began a two-day meeting on Tuesday. While investors expect the Fed to leave rates close to zero, they are nervous to hear what the officials say about the economic outlook.<br /><br />The Dow Jones industrial average slipped 17.53 points, or 0.18 per cent, to end at 9,771.91. But the Standard &amp; Poor&rsquo;s 500 Index added 2.53 points, or 0.24 per cent, to finish at 1,045.41. The Nasdaq Composite Index advanced 8.12 points, or 0.40 per cent, to close at 2,057.32.<br /><br />The S&amp;P is up 55 per cent since its early March lows, partly because of stronger-than-expected economic data.<br /><br />Semiconductors ranked among the major decliners after Morgan Stanley downgraded the sector to &ldquo;cautious&rdquo; from &ldquo;attractive&rdquo;, and cut its view on Dow component Intel Corp, saying inventories were beginning to creep up in the sector.<br /><br />The PHLX semiconductor index lost 1.3 per cent. Shares of Intel slid 2.7 per cent to $18.50 on Nasdaq.<br /><br />Even so, the Nasdaq eked out a gain as investors searched for bargains among tech shares that have suffered losses recently. The Nasdaq has been down five of the past eight sessions.<br /><br />In other deal news, Black &amp; Decker Corp shares jumped 31 percent to $62, a day after Stanley Works Inc&nbsp; said it struck a deal to buy the company. Stanley shares rose 10.1 per cent to $49.69.<br /><br />Higher oil prices helped lift the S&amp;P 500, with the S&amp;P energy sector index up 1.1 per cent.<br /><br />US oil futures CLZ9 shot up $1.47, or 1.88 per cent, to settle at $79.60 a barrel. ConocoPhillips&rsquo; stock gained 1.5 per cent to $50.75.