* Retailers offset housing data; stocks rebound
* Home Depot, Target, Saks profits top Wall St forecasts
* Indexes up: S&P 500 1 pct, Dow 0.9 pct, Nasdaq 1.3 pct
* For up-to-the-minute market news, click []
(Adds Hewlett-Packard, Analog Devices results)
By Angela Moon
NEW YORK, Aug 18 (Reuters) - U.S. stocks rose on Tuesday,
rebounding after sharp losses in the previous session, as
better-than-expected results from big retailers encouraged
investors to get back into the market.
Results at consumer giants Home Depot Inc <HD.N>, Target
Corp <TGT.N> and upscale department store operator Saks Inc
<SKS.N> were helped by cost-cutting as revenue growth remained
slack. That trend has dominated earnings season, but investors
generally approved, bidding stocks higher.
The earnings reports offset an unexpected drop in housing
starts and permits in July, sending all three major indexes up
more than 1 percent in earlier trading.
The Dow Jones industrial average <> was up 82.60
points, or 0.90 percent, at 9,217.94. The Standard & Poor's 500
Index <.SPX> was up 9.94 points, or 1.01 percent, at 989.67.
The Nasdaq Composite Index <> was up 25.08 points, or 1.30
percent, at 1,955.92.
On Monday, the S&P 500, which is up nearly 50 percent since
its early March low, faced its steepest decline in seven weeks
after poor results from Lowe's, the No. 2 U.S. home improvement
chain. Analysts were quick to term the decline a start of a
market correction.
"Today was about the recovery from yesterday's sell-off.
Lowe's was disappointing, and the market balanced that off with
Home Depot," said Marc Pado, U.S. market strategist at Cantor
Fitzgerald & Co in San Francisco.
"It's a healthy cycle, attracting investors. We buy, then
we unwind the overbought condition while the market doesn't
give up ground so easily."
Financial, retail and technology stocks were the top
advancers Tuesday, but gains were broad-based.
Mohamed El-Erian, however, the chief executive of bond fund
manager Pacific Investment Management Co, told Reuters
Television on Tuesday that the rally in U.S. stock markets has
topped out, as valuations are running ahead of fundamentals.
The S&P 500 financial sector index <.GSPF>, which suffered
the most in Monday's sell-off, was up 1.92 percent.
American Express Co <AXP.N> gained 4.3 percent to $31.69
and Bank of America <BAC.N> closed up 2.1 percent at $16.90.
Citigroup Inc <C.N> rose 3.5 percent to $4.14.
Home Depot shares rose 3.1 percent to $26.93 while its key
rival, Lowe's, dropped 2.3 percent to $19.99 following a
sell-off the previous day on disappointing results.
Target climbed 7.6 percent to $44.32 and Saks added 6.9
percent to $5.72. The S&P retail index gained <.RLX> 1.8
percent.
The Nasdaq outpaced the other indexes after RBC highlighted
investment opportunities in the smartphone market and raised
its price target on shares of Apple Inc <AAPL.O>, Research in
Motion Ltd <RIMM.O> and Palm Inc <PALM.O>. []
Apple's shares climbed 2.8 percent to $164.01, RIM added
4.6 percent to $73.99 and Palm climbed 4.9 percent to $13.88.
Hewlett-Packard Co <HPQ.N> edged up 1 percent to $43.56
from its closing price after the bellwether reported results
after the bell.
Shares of Analog Devices Inc <ADI.N> slid 5.6 percent to
$25.70 after the bell after the semiconductor equipment maker
released third-quarter results.
Volume was light on the New York Stock Exchange, with 991
million shares changing hands, below last year's estimated
daily average of 1.49 billion, while on the Nasdaq, about 1.75
billion shares traded, also below last year's daily average of
2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by
a ratio of 4 to 1, while advancing stocks beat decliners on the
Nasdaq by about 3 to 1.
(Editing by Padraic Cassidy)
