* Housing data sparks optimism about economy
* Barclays reassures despite loss, financials gain
* Wyeth takeover, rating view on GE add to positive tone
* For up-to-the-minute market news, click []
(Updates to midday, changes byline)
By Rodrigo Campos
NEW YORK, Jan 26 (Reuters) - U.S. stocks rose on Monday
after an unexpected rise in home sales and a $68 billion
takeover in the drug industry sparked investor optimism
following three straight weekly losses.
An S&P index of financial stocks <.GSPF> gained as much as
4.2 percent after British bank Barclays <BARC.L> said it won't
need new capital -- a huge loss of about $11 billion
notwithstanding. For details see []. At midday,
the S&P financial index had trimmed its earlier gain, but was
still up 1.6 percent.
In a rare piece of good news for an economy in recession,
sales of existing U.S. homes surprisingly rebounded, rising
6.5 percent in December, while the inventories of unsold homes
registered their biggest one-month drop since December 2001.
The Dow Jones index of home builders' stocks <.DJUSHB>
advanced 3.8 percent.
Positive news also came from Pfizer Inc <PFE.N>, the
world's largest drugmaker, as it said it would buy its U.S.
rival Wyeth <WYE.N> for about $68 billion in a move to
diversify its revenue base. [].
"The market is arguably six months ahead of the economy
and we are starting to see people plan for what will happen in
the future and nibble away on positive days like today," said
Jim Fehrenbach, head of equity distribution at Piper Jaffray
in Minneapolis.
"You add all this small news together and you can
construct a more positive story for the future than what you
have right now."
The Dow Jones industrial average <> gained 90.94
points, or 1.13 percent, to 8,168.20. The Standard & Poor's
500 Index <.SPX> rose 12.46 points, or 1.50 percent, to
844.41. The Nasdaq Composite Index <> added 24.03 points,
or 1.63 percent, to 1,501.32.
In the financial sector, shares of JPMorgan Chase & Co
<JPM.N> rose almost 5 percent to $25.47 and helped bolter the
Dow industrials. The U.S.-listed shares of Barclays Plc
<BCS.N> surged nearly 64 percent to $5.03 on the New York
Stock Exchange.
Among home builders' shares, Lennar Corp <LEN.N> shares
rose 13.2 percent to $7.74 and the stock of luxury builder
Toll Brothers <TOL.N> gained 3.8 percent to $18.59.
Shares of Dow component General Electric <GE.N> rose 3.3
percent to $12.43 after investors welcomed news that credit
ratings agency Standard & Poor's said it will not cut GE's
'AAA' debt rating despite a 44 percent drop in fourth-quarter
profit and a warning of an "extremely difficult" 2009. For
details see [].
A rise in NYMEX crude futures <CLc1> above $47 a barrel
prompted investors to buy energy companies' shares and lifted
the S&P energy index <.GSPE> about 2 percent.
Caterpillar Inc <CAT.N> shares, however, fell almost 9
percent to $32.51 after the heavy equipment maker forecast its
2009 profit would drop significantly from 2008.
[]
Caterpillar and Pfizer were among the companies announcing
job cuts on Monday, with the ax falling on some 70,000 workers
in the United States and Europe as corporations cut costs to
battle the ongoing recession. []
Pfizer's stock fell 9.5 percent to $15.80, following news
of its plan to buy Wyeth and its report of lower
fourth-quarter profit. In contrast, Wyeth's stock was up 0.6
percent at $43.98.
(Editing by Jan Paschal)
