The Wall Street Journal-20080123-Sears Shoots Up 12- As Lampert Retools- Home Depot Gains- As Does Wal-Mart- Citigroup Declines
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Sears Shoots Up 12% As Lampert Retools; Home Depot Gains, As Does Wal-Mart; Citigroup Declines
Home Depot, Wal-Mart Stores and J.P. Morgan Chase were among the improbable leaders of a relatively resilient market.
Just after the opening bell yesterday, the Dow fell as much as 464 points and recorded a 52-week low before fighting back, as the ramifications of the Federal Reserve's measure washed through interest-rate-sensitive retail and financial sectors. Nevertheless, the Dow completed its fifth straight session of declines.
When U.S. stocks joined the global slide after the opening bell, "It reminded me of 1987, because the market was eroding steadily . . . and it ended up in a real waterfall decline, and I think we're having that this time," said Michael Metz, chief investment strategist at Oppenheimer & Co. "It has all the qualities of a real hysterical, climactic selloff."
Home Depot rose $1.92, or 7.3%, to $28.20. Sanford Bernstein raised its rating on the home-improvement store and some of its rivals to "outperform" from "market perform," saying the stocks may well turn around before the fundamentals of their businesses.
Among other "home makeover" shops, Lowe's rose 2.35, or 10.6%, to 24.54, and Bed Bath & Beyond (Nasdaq) added 2.21, or 8.2%, to 29.26.
Sears Holdings (Nasdaq) added 10.42, or 12%, to 99.85. In a new effort to head off slowing sales and margins, Chairman Edward Lampert plans to reorganize the 121-year-old retailer into five distinct business units. Among peers, Wal-Mart was up 1.62, or 3.4%, to 49.20.
Blindsided by the Fed, traders evidently covered bets against some of the most beaten-down stocks, and those that topped losing lists for months suddenly surged to the top of the pile. Among large home builders for example, Toll Brothers rose 80 cents, or 4.6%, to 18.09.
Among financials, another sector that bears have targeted for months, Bank of America rose 1.42, or 4%, to 37.39. The bank posted a 95% decline in fourth-quarter profit amid rapid deterioration in its consumer and commercial-loan portfolios and write-downs of subprime- mortgage-related assets. The chief executive of the financial-services company said 2008 earnings should top $4 a share, and he expects some growth from the U.S. economy.
Among peers that are Dow components, J.P. Morgan Chase rose 1.27, or 3.2%, to 40.86, and Citigroup fell 5 cents to 24.40.
Selling was broad, however. UAL (Nasdaq) fell 1.07, or 3.2%, to 31.87 after the parent of United Airlines stressed it remains interested in industry consolidation and may yet spin off its frequent-flier program.
Another worrying sign for the market: Both defensive stocks, or those somewhat shielded against the effects of recession, and many materials and energy stocks, which depend on economic growth, fell. Among defensive issues, Johnson & Johnson fell 1.02, or 1.5%, to 65.27. The maker of baby powder, drug-coated stents and a range of other health-care products, posted an increase in fourth-quarter profit, but analysts warned that patent expirations raise some doubts about future growth.
American depositary shares of Diageo fell 89 cents, or 1.1%, to 76.73 even after Morgan Stanley raised its rating on the brewer of Guinness stout and distiller of Smirnoff vodka among other beverages.
Waters fell 14.65, or 20%, to 58.58 after the maker of analytical and measurement tools posted fourth-quarter profit short of the Wall Street estimate.
Oil futures pared big losses but closed below $90 a barrel. Among energy companies, Exxon Mobil fell 2.63, or 3.1%, to 82.45.
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Karen Talley and Jed Horowitz contributed to this article.
