Stocks are up as job cuts signal efforts to regroup
New york — Stocks climbed for a second day Monday as Home Depot Inc. cut jobs, joining companies that are taking steps to weather the economic slowdown, and Freeport-McMoRan Copper & Gold Inc. beat analysts’ profit estimates.
Home Depot advanced 4.7 percent, leading the Dow Jones industrial average’s gain, after the biggest home improvement retailer eliminated 7,000 jobs. Freeport-McMoRan surged 9.3 percent. Lennar Corp. jumped 14 percent as Citigroup Inc. recommended the house builder, saying its shares sank too far.
The Standard & Poor’s 500 index added 0.6 percent to 836.57, trimming its yearly loss to less than 7.4 percent. The Dow rose 38.47 points, or 0.5 percent, to 8,116.03. The Nasdaq composite index gained 12.17, or 0.82 percent, to 1,489.46.
"The job cuts have scared the pants off of people, but they are a part of repairing balance sheets and fixing a company to become stronger," said Robert Lutts, president of Cabot Money Management in Boston, which manages $400 million.
Home Depot rose $1.01 to $22.73.
Freeport-McMoRan Copper & Gold jumped $2.13 to $24.94. The world’s largest publicly traded copper producer reported profit excluding some one-time items of 6 cents a share, beating the $1.01 a share loss estimated by analysts.
Lennar climbed 14 percent, the most in the S&P 500, to $7.82. The builder was raised to buy from hold by analysts at Citigroup.
General Electric Co. jumped 3.2 percent to $12.42 after S&P said the company’s and General Electric Capital Corp.’s AAA debt ratings are not immediately affected by fourth-quarter earnings results payday loans.
Rohm & Haas Co. dropped 13 percent to $57.10 after saying Dow Chemical Co. doesn’t intend to close its $15.4 billion acquisition by today as required by their merger agreement.
Caterpillar slumped $2.99 to $32.67 after reporting profit that trailed analysts estimates.
Wyeth fell 35 cents to $43.39 even after Pfizer Inc. said it will pay $50.19 a share in cash and stock for the drug maker. Pfizer retreated 10.3 percent to $15.65.
"The market is signaling that its probably not going to go through, not at that price anyway," said Peter Sorrentino, who co-manages $16 billion at Huntington Asset Advisors Inc. in Cincinnati. "It looks tenuous at best."
Profits decreased 47 percent for the 84 companies in the S&P 500 that have released fourth-quarter results since Jan. 12. Analysts now forecast a 32 percent drop in earnings for the fourth quarter after saying in March 2008 that net income would rise as much as 55 percent, according to Bloomberg data.
"Earnings have been an absolute disaster so far, but the market feels that earnings numbers couldn’t possibly get any worse than they are," said David Kelly, chief market strategist at JPMorgan Funds, which oversaw $304 billion as of Oct. 8.
"The market is getting used to the shocking news flow even though the hits keep on coming."
The S&P 500, which has dropped for three straight weeks, is still 11 percent above an 11-year low reached on Nov. 20.