Caterpillar helps boost US Stocks

U.S. stocks opened modestly higher on Monday after heavy-equipment maker Caterpillar Inc. reported positive results and said the global economy is improving. Shares of Caterpillar were up 4.2%, helping lift the Dow Jones Industrial Average, which gained 34.31 points to 11,238.59. The S&P 500 Index rose 2.07 points to 1,219.35. The Nasdaq Composite climbed 4.94 points to 2,535.09.

However, Caterpillar’s surge accounted for a majority of the measure’s climb, as its $3.60 jump represented more than 27 points, or 71%, of the Dow’s rise.

General Electric, also considered an economically-sensitive stock, gained 1.5%, while Alcoa rose 1.2% as metals futures climbed.

The Dow’s financial components fell after key Senate Democrats reached a tentative deal on sweeping new rules for the derivatives market that is expected to force major Wall Street banks to spin off their swaps desks. Under the deal, banks would have to spin off their derivatives trading desks in order to be eligible for federal financial assistance from the Federal Reserve and Federal Deposit Insurance Corp.

J.P. Morgan Chase shed 1.4%, while Bank of America fell 0.6%. Goldman Sachs, not a Dow component, fell 2.6%, while Citigroup tumbled 2.9% and Morgan Stanley lost 2.2%.

Berkshire Hathaway rose 0.4%, even after Senate Democrats agreed Monday to kill a provision pushed by the company to protect its $63 billion derivatives portfolio. Berkshire proposed prohibiting the government from requiring companies to hold collateral against their existing derivatives trades.

The Nasdaq Composite edged up 0.1%. The Standard & Poor’s 500-stock index advanced less than a point, with its materials and consumer discretionary sectors posting the biggest gains.

Whirlpool led the consumer discretionary sector’s climb, rising 15% after the appliance maker’s first-quarter earnings more than doubled as revenue surged and margins increased and the company raised its 2010 earnings outlook.

Also boosting the market, the Federal Reserve Bank of Dallas reported that Texas-area manufacturing rose sharply in April, expanding for the sixth consecutive month.

But investors remained uneasy over debate surrounding legislation poised to overhaul the financial system.

“The most profitable part of most of these banking operations lately has been their proprietary trading,” noted Brian Peardon, wealth advisor at Harrison Financial Group. He predicted financial shares could follow a pattern similar to health-care stocks ahead of the legislative overhaul that passed in March.

“Health care shares were trading in a rough range and once it passed they spiked, but now they’re having struggles again,” Peardon said.