Stocks fall as Buffett deal brings modest comfort

Stocks ended a volatile session Monday mostly higher, lifted by Warren Buffett’s move to buy a railroad, but the Dow industrials fell.

Gold jumped to a record after India’s central bank bought 200 metric tons of the metal.

Investors were encouraged by Berkshire Hathaway’s agreement to pay $34 billion for Burlington Northern Santa Fe in what Buffett, Berkshire’s chairman, termed an “all-in wager” on the future of the U.S. economy.

The announcement lifted shares of industrial, raw-material and energy stocks, and commodity prices rose as well. The Dow transportation average surged 5.3% as Burlington Northern, one of its 20 components, soared 28%. Among other railroads, CSX climbed 7.3%, while Norfolk Southern gained 5.4%.

Also bolstering the market was news late Monday that toolmaker Stanley Works was acquiring Black & Decker for $3.46 billion in stock. Black & Decker shares shot up 31%, while Stanley Works rose 10%.

Offsetting those upbeat developments were further worries about unemployment as healthcare-product giant Johnson & Johnson said it would cut as much as 7% of its global workforce to cut costs. Investors worry that high unemployment will make it hard for the economy to sustain recent growth.

The Dow fell 17.53 points, or 0.2%, to 9,771.91, after being down as much as 86 points. The blue-chip gauge rose 77 points Monday on reports of improvements in manufacturing and housing.

“We’re seeing a natural ebb and flow of risk appetite,” said Kevin Gardiner, an investment strategist at Barclays Wealth.

The broader Standard & Poor’s 500 index gained 2.53 points, or 0.2%, on Monday to 1,045.41.

The Nasdaq composite index rose 8.12 points, or 0.4%, to 2,057.32.

The Russell 2,000 index of smaller stocks rose 1.5%.

Three stocks rose for every two that fell on the New York Stock Exchange.

Gold for November delivery rose $30.90, or 2.9%, to a record close of $1,084.30 an ounce in New York after India’s $6.7-billion purchase of bullion from the International Monetary Fund generated speculation that more central banks would shift some reserves into gold.

The December gold contract rose to an intra-day high of $1,088.50 an ounce before settling at $1,084.90.

Yields on Treasury bonds rose. The benchmark 10-year T-note climbed to 3.47% from 3.42% late Monday.

The dollar was mixed against other major currencies.

Oil futures rose $1.47 to settle at $79.60 a barrel.

Overseas, key stock indexes fell 1.3% in Britain, 1.4% in Germany and 1.5% in France. The Japanese market was closed for a holiday.