GM Generali

By Kate Gibson

The large wave of layoffs announced on Monday gave added impetus to President Barack Obama's call for quick action on his economic stimulus proposals but had little impact on the market, which was already anticipating another 500,000 job losses this month.

"What is remarkable about today is the layoffs seem to be coming from every corner of the economy. Usually there are sectors that get hit particularly hard. This recession has been focused on housing and financial services, although automotives have come into it as well. But now we have other areas, like retail and technology, as the next wave of the recession hits," said John Challenger, CEO of Challenger, Gray & Christmas Inc.

The roughly 50,000 job cuts announced on Monday by U.S. companies as well as several overseas represents one of the worst, if not worst, to come on a single day since the year began. Since Jan. 1, Challenger counts 128,600 planned cuts in looking at large layoffs by 19 major U.S. corporations.

"Given the new headlines, I would imagine that 500,000 figure to be revised higher, making this the third straight month in which the economy has shed more than 500,000 jobs and the fifth straight month more than 400,000, the first such occurrence of either dating back to the beginning of 1939," said Dan Greenhaus, equity strategy group, Miller Tabak & Co.

Additionally, a reading of exactly 500,000 would bring the total number of jobs lost this cycle to 3.089 million over 13 consecutive months, outpacing the 2.838 million jobs lost over 17 straight months from August 1981 until December 1982, Greenhaus said.

"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.

In afternoon trade, Caterpillar was one of half a dozen components weighing on the Dow Jones Industrial Average (DJI), which was up 77.43 points to 8,152.27. The S&P 500 (SPX) gained 10.33 points to 842.28, with energy shares leading the gains, while the Nasdaq Composite climbed 17.66 points to 1,494.95.

Shares of Caterpillar were lately off nearly 11%.

Another Dow laggard -- General Motors Corp. (GM) -- will lay off 2,000 more workers, The Wall Street Journal reported on its Web site.

Monday's hits to the labor market will increase unemployment expectations to 9% for many economists and creates a "deeper hole from which we must emerge through," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

Shares of Sprint Nextel Corp. (US-S) edged fractionally lower 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 Inc. (HD) saw its market valuation climb, recently up 4.3%, 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 19,000 employees while buying rival Wyeth (WYE) in a $68 billion deal.

Shares of Pfizer were down 9.5%.

"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 Greenhaus.

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.

However, "the intensity of the latest round of layoff announcements certainly raises concerns regarding growth here in the first quarter," he added.

Job losses came from overseas as well, with Philips Electronics (PHG), Europe's biggest consumer electronics firm, saying it would lay off 6,000 workers. It also reported its first quarterly loss in five years.

And steel giant Corus Group said it would cut 3,500 jobs around the globe, with most, or about 2,500, coming in Britain.

Dutch bank and insurance firm ING (ING) said it would eliminate 7,000 positions after last month's first quarterly loss in the company's history.

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