By Kate Gibson
NEW YORK (MarketWatch) -The large wave of layoffs announced on
Monday gave added impetus to President Obama's call for quick
action on his economic stimulus proposals but had little impact on
the market, which is anticipating another 500,000 job losses this
month.
"Layoffs are often a lagging indicator into what is going on
with the economy. Clearly it's a sign that they (the companies
shedding workers) believe the recovery is not right around the
corner," said Jeffrey Kleintop, chief market strategist, LPL
Financial.
Economic bellwether Caterpillar Inc. (CAT) was among those
wielding the axe, with the heavy machinery giant saying it would
slash 20,000 jobs during the first quarter. While Caterpillar's
grim forecast had its shares slumping 7%, the shares of other
companies reducing employees moved in the opposite direction.
Given that much of Caterpillar's sales are outside the U.S., the
company's decision to cut its workforce signals the view that
"perhaps the U.S. economy emerges out of recession by the end of
this year, but the global economy may remain mired into 2010," said
Kleintop.
Near midday, Caterpillar was one of six components weighing on
the Dow Jones Industrial Average (DJI), which was up 98.05 points
at 8,173.30. The S&P 500 (SPX) gained 13.64 points to 845.59,
with energy shares leading the gains, while the Nasdaq Composite
climbed 24.49 points to 1,501.78.
Sprint Nextel Corp. (US-S) and Home Depot Inc. (HD) both saw
their market valuation climb, with Sprint up 3% after the
telecommunications company said it would cut about 8,000 jobs, or
about 14% of its workforce, in the first quarter to cut costs.
Home Depot shares gained 6.2% after the nation's biggest home
improvement retailer said it would shed 7,000 workers.
And drug goliath Pfizer Inc. (PFE) said it would lose more than
8,000 employees while buying rival Wyeth (WYE) in a $68 billion
deal.
"Further layoffs are indicative of the continued deterioration
in the U.S. economy specifically and the global economy more
broadly. I wouldn't read into anything specific from the numbers
but I will say that companies are adjusting to economic weakness
and addressing the source of most of their costs: labor," said Dan
Greenhaus, equity strategy group, Miller Tabak & Co.
Corporations "are slimming down to adjust to lower levels of
demand which will help them weather the downturn. That said, I
think the continued stream of layoff announcements puts upward
pressure on upcoming labor market indicators including weekly
jobless claims and the employment report for January which is going
to be worse than is currently expected," said Greenhaus.
Job losses came from overseas as well, with Philips Electronics
(PHG), Europe's biggest consumer electronics firm, saying it would
layoff 6,000 workers. It also reported its first quarterly loss in
five years.
And steel giant Corus Group said it would hack 3,500 jobs around
the globe, with most, or about 2,500, coming in Britain.
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