Wall Street rises after Wal-Mart, Home Depot results

NEW YORK (Reuters) - Wall Street rose on Tuesday after bellwether retailers Wal-Mart and Home Depot recorded better-than-expected profits, even as Wal-Mart cautioned about the strength of the U.S. consumer.

Wal-Mart Stores Inc said quarterly earnings were helped by cost controls and international markets, but sales at U.S. stores fell for the fifth consecutive quarter as the world's largest retailer warned the U.S. consumer remained under pressure. Its stock rose 1.6 percent to $51.22.

Home Depot Inc , the top home improvement chain, said income beat estimates, also helped by cost tightening, but sales missed estimates. The stock gained nearly 3 percent to $28.17.

In the latest economic data, producer prices increased in July for the first time in four months, helping to allay concerns about deflation, but housing starts rose at a weaker rate than expected and permits fell to their lowest point in more than a year.

Dan Cook, senior market analyst at IG Markets in Chicago, said markets were in a wait-and-see mode after a risk-averse spell last week. He cautioned that profits driven by cost cutting at Wal-Mart did not demonstrate underlying strength in the economy.

"The waters are way too murky at this point," he said. "We still have a huge labor problem in this country and it's going to be hard to get demand."

The Dow Jones industrial average <.DJI> gained 59.26 points, or 0.58 percent, to 10,361.27. The Standard & Poor's 500 Index <.SPX> rose 7.60 points, or 0.70 percent, to 1,086.98. The Nasdaq Composite Index <.IXIC> added 16.21 points, or 0.74 percent, to 2,198.08.

Stocks fell sharply last week amid fears of a slowdown in the economy. Although Wall Street finished flat on Monday, many analysts said the trend is for stocks to remain lower on concerns about the economy.

Agricultural companies rose after BHP Billiton Ltd launched an unsolicited $38.6 billion takeover bid for Potash Corp of Saskatchewan Inc . The world's largest fertilizer maker promptly rejected the offer as "grossly inadequate." Potash's U.S.-traded stock rose 26 percent to $141.26.

CF Industries Holdings Inc rose 6.7 percent to $90.22 as Goldman Sachs upgraded the stock to "conviction buy," while Monsanto Co added 2 percent to $58.88.

Abercrombie & Fitch Co topped estimates as profit was helped by discounts that lifted sales. The retailer said promotions ate into margins, though, and the stock fell 7 percent to $34.90.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)

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