Midday Market Update: Wall Street Down Despite Factory Orders

Stocks and exchange traded funds (ETFs) are slightly negative this morning as the markets process news about factory orders and a big deal between Berkshire Hathaway and Burlington Northern Santa Fe worth billions.

Warren Buffett’s Berkshire Hathaway (BRK-B) has agreed to buy Burlington Northern Santa Fe (BNI) for $34 billion. Burlington Northern is the country’s second-largest raiload, and it’s also the biggest transporter of food products and coal, making it a harbinger of economic health, says Samantha Bomkamp for the Associated Press.

iShares Dow Jones U.S. Transportation Average (IYT) is up nearly 5% this morning on the news. Year-to-date, it’s up 3.3%.

Factory orders rose 0.9%, thanks to heavier demand in automobiles, heavy machinery and military aircraft. It’s the fifth increase in six months. The jump has economists optimistic of a recovery, but if consumer spending doesn’t pick up, manufacturing will suffer again.

PowerShares Global Emerging Markets Infrastructure (PXR) is down about 1.2% this morning; Caterpillar (CAT) is 2.3%.

The European Union raised its 2010 growth forecast for the 27 nations to 0.7%, reports David Jolly for T he New York Times. By 2011, the EU anticipates growth of 1.5%. Despite the positive forecasts, the EU still feels that some factors will weigh on a recovery, including weak private demand and a struggling job market.

iShares MSCI EMU (EZU) is down nearly 2% this morning.

For full disclosure, Tom Lydon’s clients own shares of EZU.

Subscribe by RSS Subscribe by Email