Stocks Edge Up Ahead of Earnings Season

Investors debated mulled upcoming reports from big-name companies and a fresh batch of M&A news

Major stock indexes remained slightly higher in the final hour of trading Monday as market players returned from the three-day Easter holiday. Transportation stocks were lifted by news that Warren Buffett bought a stake in a railroad company. A press report of a possible $50 billion LBO bid for Dow Chemical (DOW) was also stirring the market, says S&P.

The Dow Jones industrial average rose 10.07 points, or 0.08%, to 12,570.27. The broader Standard & Poor's 500 index edged up 1.51 points, or 0.11%, to 1,445.27. The tech-heavy Nasdaq composite gained 1.69 points, or 0.07%, to 2,473.03.

Caution over first-quarter earnings and new trade complaints against China were apparently offsetting optimism over stronger-than-expected March jobs data from Friday and the continued strength in M&A activity, notes S&P.

This week's economic calendar is a little light. Highlights include the FOMC minutes from the Mar. 20-21 meeting on Wednesday and the PPI will be out Friday. The PPI is expected to climb 0.7% overall, and 0.2% for the core index.

In economic news Friday, U.S. nonfarm payrolls in March rose 180,000, while the unemployment rate fell to 4.4% and hourly wages rose at a 4.0% annual rate. Traders continue to debate the March employment report and whether the strength will be sustained, says Action Economics. According to federal funds futures, the market is showing only about 10% chance for a quarter-point rate cut this quarter, down from nearly 80% probability in late February after the Dow's plunge, says Action Economics.

Alcoa (AA) will kick off first-quarter corporate earnings season on Tuesday.

Advanced Micro Devices (AMD) lowered its revenue outlook because of lower prices and weaker-than-expected sales, as the chip maker continues to war with Intel (INTC).

Among other stocks moving Monday, Burlington Northern (BNI) moved up on news that Warren Buffett's Berkshire Hathaway (BRK.A) reported an equity ownership of 10.9% in the company. Also, CNBC reports that Berkshire has bought large stakes in two other North American railroad companies besides Burlington.

The news lifted the entire sector, with the Dow Jones Transportation average gaining 2% in the session.

Stratagene Corp. (STGN) agreed to be acquired by Agilent Technologies (A) for $10.94 per share cash.

World Air Holdings (WLDA) agreed to be acquired by Global Aero Logistics Inc. in cash deal valued at $315 million, or $12.50 per share.

In the mortgage market, alt-A lender American Home Mortgage (AHM) lowered its earnings forecast due to troubles in the secondary mortgage and mortgage-backed securities markets.

International Rectifier (IRF) says its audit committee finds financial statements for the first quarter to third quarter of fiscal year 2006, full fiscal year 2006, and the first and second quarters of fiscal year 2007 should no longer be relied upon. It found material weaknesses in internal control over financial reporting existing at a foreign unit.

MedImmune (MEDI) sees first quarter EPS (excluding share-based compensation expense) of 62-67 cents, vs. 23 cents last year. It cited an estimated 11%-12% increase in total revenues, greater than 2x increase in net income margin.

In the energy markets, May NYMEX crude futures skidded $2.77 to $61.51 in a carryover of last week's late selling triggered by Iran's release of 15 British sailors. May reformulated gasoline futures, which had rallied earlier in Monday's

session, plunged 3.42 cents to 209.46 cents.

European stock markets were closed for the Easter Monday holiday. In Japan, the Nikkei 225 index climbed 258.98 points, or 1.48%, to 17,743.76. The markets in Hong Kong were closed.

Treasury Market

The benchmark 10-year Treasury note rose 2/32 in price to 99-3/32 for a yield of 4.749%, while 30-year bonds gained 2/32 to 97-13/32 for a yield of 4.920% as traders braced for speeches Tuesday by Federal Reserve Governor Mishkin, Dallas Fed President Fisher and Philadelphia Fed President Plosser. Fed chairman Bernanke speaks Wednesday before release of the March 21 FOMC minutes.