Rails Chugging Along, Despite Dubai

NEW YORK (TheStreet) --

The rail sector has recovered of late as news of Warren Buffet's big bet on Burlington Northern(BNI Quote) and a U.S. economic recovery led to sector gains. While the Dubai debt crisis sent the markets into a spiral on Friday morning, triggering fears of a hard stop to the global recovery, the fears did not seem to have taken a significant toll on the overall rail outlook on Monday.

The larger outlook for rail and the improving volume numbers bested any short term fears about a slowdown caused by the Dubai debt crisis.

Most of the major rail stocks were trading within a normal range, indicating a response in line with the overall market response to the Dubai situation, which on Monday seemed to have shrugged off Friday's panicked reaction. Both the S&P and DJIA finished the day in positive territory, as did the transportation sector with a 58 basis point gain -- slightly higher than the DJIA and S&P gains.

In the past few days, some of the biggest movements in rail stocks have been related to sector-specific news developments, as opposed to global economic concerns.

Canadian National Railways(CNI Quote) shares had been down on Friday with the strike looming, and had dropped more than a $1 from Wednesday to Friday. Still, Canadian National shares ended Monday at $52.60, up from a low of $51.73 on Friday morning, or a minor 0.2% gain on the day.

Approximately 1,700 rail engineers went on strike on Saturday morning. A new contract was imposed by Canadian National last week after 14 months of middling progress in negotiations with the Teamsters union. The Canadian government announced its intention to create back-to-work legislation on Sunday morning, which may have helped the stock to recover slightly on Monday. The government fears that any large work stoppage could have a larger-than-normal influence on economic recovery in Canada.