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NEW YORK (MarketWatch) -- Transports stocks, which have underperformed the broad market since March, jumped Tuesday after receiving a vote of confidence from Warren Buffett, whose investment firm doled out $44 billion to buy railroad operator Burlington Northern Santa Fe Corp.

Berkshire Hathaway Inc. said it would pay $100 a share to acquire the 77% of Burlington Northern it doesn't already own. The price includes the assumption of $10 billion of debt. See full story on Berkshire Hathaway.

The Dow Jones Transportation Average jumped 5%, helping to offset some of its steep losses seen last week. The broad market fell sharply last week as investors reassessed whether the economic outlook justified the big rally in stocks seen since March. See Market Snapshot.

The broad S&P 500 Index posted a weekly loss of 4%, leading it to fall 2% for October, its first monthly decline since February.

Things were worse for the Dow transports, which tumbled 5% last week and lost 4.9% for the month. Transportation stocks have also underperformed the broad market the whole year, taking the brunt of the pain of the economic downturn in the U.S. and globally.

But the deal by Buffett, seen as a vote of confidence in the economic outlook, helped lift sentiment.

"We believe Berkshire Hathaway's move looks beyond near-term regulatory and economic uncertainty and makes a strong and positive statement as to the long-term role of railroads in the U.S. economy," said Kevin Kirkeby, railroads and trucking analyst at Standard & Poor's.

Most of the gains in the Dow transports were seen among railroad stocks. Shares of Burlington Northern rallied 28%. Among other railroad stocks, Union Pacific Corp. gained 7%, Norfolk Southern Corp. rose 5%, and CSX Corp. gained nearly 7%.

But with a rising tide lifting all boats, shipping stocks also rose, with Fedex up 2%, and United Parcel Services , which rose fractionally.

Airlines, however, were mixed as crude-oil futures gained 1.2% to trade above $79 a barrel. See Futures Movers.

Low-cost carrier JetBlue Airways fell 1% and Southwest Airlines was flat. But Continental Airlines rose 3% after posting a slower revenue-decline rate for October. AMR Corp. gained 1.7%. See Airline Stocks.