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Investors have had little reason to be hopeful during the past two years as the economic news seems to get more depressing by the day. But lately, the stock market has turned optimistic and investors begin the week bracing themselves for any word that the good times may not last.

Stocks appear poised to open higher as Express Scripts Inc. (NASDAQ: ESRX) agreed this morning to acquire Wellpoint Inc.'s pharmacy benefits management business for $4.68 billion, proving that the once-moribund mergers and acquisitions market is showing signs of life.

Yesterday no fewer than 20 companies around the world announced 40,000 layoffs. As I posted, that's the flip side of the great inflation report that came out this week. And those 40,000 are among the first of 2.1 million U.S. jobs that are forecast to disappear in 2009 -- particularly if the $825 billion stimulus plan does not pass.

Here are some of yesterday's cuts from the U.S. companies:

• Circuit City Stores is liquidating and taking 30,000 jobs along for the ride
• Hertz Global Holdings Inc. (NYSE: HTZ) is eliminating 4,000 jobs worldwide due to a drop in travel demand.
• WellPoint (NYSE: WLP) the second-largest U.S. health insurer, will end 1,500 jobs, which include 600 workers and 900 open positions.
• Clear Channel (NYSE: CCO) -- the largest U.S. radio broadcaster -- will lay off 1,500 employees on January 20.

Yesterday, several of America's largest and most well-know companies cut people at an alarming rate. The liquidation of Circuit City could put a total of 30,000 employees onto the street. Pfizer (NYSE: PFE) cut 2,400 sales people. AMD (NYSE: AMD) cut more than 1,000 people. Hertz (NYSE: HTZ) said it will let 4,000 people go, and Wellpoint (NYSE: WLP) will fire more than 1,000 people.

Bloomberg reported that GE (NYSE: GE) might fire up to 11,000 people in its financial unit.

So, in one day, as many as 60,000 people were out of work. A look at the activity shows why it will be so hard to arrest the drop in jobs. The companies involved in downsizing yesterday range from big pharma to transportation to tech to retail. The 24 hours were, in essence, a cross-section of the entire American economy suffering under the weight of the recession.

Economists say there cannot be a recovery with a reversal of the fall in unemployment. Unfortunately, addressing the cause of joblessness is has moved well beyond saving the retail industry and Detroit. Industry by industry, the entire system has become diseased.

Douglas A. McIntyre is an editor at 247wallst.com.

Wellpoint (NYSE: WLP - option chain) stock is dropping today after the company announced it will suspend marketing of its Medicare plans for seniors while it corrects a number of compliance problems. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on WLP.

This morning, WLP opened at $37.40. So far today the stock has hit a low of $36.77 and a high of $39.45. As of 12:25, WLP is trading at $38.74, down $2.22 (-5.4%). The chart for WLP looks neutral and S&P gives WLP a neutral 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider a March bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverages nice returns.

For this particular trade, we will make a 6.4% return in two months as long as WLP is below $50 at March expiration. Wellpoint would have to rise by more than 28% before we would start to lose money. Learn more about this type of trade here.

WLP hasn't been above $50 since September and shown resistance around $45 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in WLP.

MOST NOTEWORTHY: Bed Bath & Beyond, DSW Inc and Oplink Comm were today's noteworthy downgrades:

• JP Morgan downgraded Bed Bath & Beyond (NASDAQ: BBBY) to Underweight from Neutral citing recent sales commentary from competitors and the difficult macro environment.
  
• Oppenheimer cut DSW Inc (NYSE: DSW) to Perform from Outperform following the company's Q1 miss and lower than expected guidance, as they see little visibility in the coming quarters.
  
• Piper downgraded shares of Oplink Communications (NASDAQ: OPLK) to Sell from Neutral following the company's negative earnings preannouncement and lowered their target to $9.00 from $14.

OTHER DOWNGRADES:

• Tiffany (NYSE: TIF) was downgraded to Sell from Neutral at Merrill.
  
• Goldman cut National Semiconductor Corp (NYSE: NSM) to Sell from Neutral.
  
• Wellpoint (NYSE: WLP) was downgraded to Equal Weight from Overweight at Lehman.

Here are a few highlights from this past week's earnings coverage from BloggingStocks:

• America's Car-Mart Inc. (NASDAQ: CRMT) beat estimates by closing underperforming branches.
• Aristotle Corp. (NASDAQ: ARTL) fourth-quarter revenue edged up while earnings slipped.
• Blackstone Group (NYSE: BX) fourth-quarter profit plunged on bond insurance related write-downs.
• Boston Beer Co. Inc. (NYSE: SAM) fourth-quarter profit more than doubled as drinkers switch to craft beers.
• CAI International Inc. (NYSE: CAP) beat expectations fourth quarter and raised its guidance.
• Caterpillar Inc. (NYSE: CAT) offered encouraging guidance for the full year and long term.
• Consolidated Communications Holdings Inc. (NASDAQ: CNSL) beat estimates for the fourth quarter.
• Flow International Corp. (NASDAQ: FLOW) beat expectations, sending shares up sharply.
• Gehl Co. (NASDAQ: GEHL) fourth-quarter profit fell but beat expectations due to international growth.
• J. Crew Group Inc. (NYSE: JCG) raised its full-year outlook, sending shares higher.
• Kroger Co. (NYSE: KR) beat fourth-quarter expectations though profit slumped due to inflation.
• Maidenform Brands Inc. (NYSE: MFB) beat fourth quarter estimates due to sourcing initiatives.
• Smart Balance Inc. (NASDAQ: SMBL) nearly doubled its fourth-quarter loss despite strong revenue growth.
• Take-Two Interactive Software Inc. (NASDAQ: TTWO) posted a narrower-than-expected first-quarter loss.
• WellPoint Inc. (NYSE: WLP) cut its first-quarter and full-year forecasts on higher expenses.

Yesterday was a difficult trading session for the managed healthcare group, with industry giant WellPoint Inc. (NYSE: WLP) cutting its 2008 profit forecast, blaming higher claims expense and the weak market conditions. Today is another tough day, with health care companies taking another hit on pressure from Humana Inc. (NYSE: HUM), which warned about lower-than-expected first quarter and full year earnings results.

Blaming increased prescription expenses, the second largest seller of Medicare drugs cut its first-quarter earnings outlook to a range of 44 to 46 cents a share against its previous prior guidance of 80 to 85 cents a share. Analysts, on average, expected the health insurer show higher first-quarter earnings of 78 cents, according to Thomson Financial.

The company also projected full-year earnings between $4.00 and $4.25 per share, down from a previous forecast of $5.35 to $5.55. Humana's estimates were below analysts' expectations for full-year earnings of $5.47per share.

Coventry Health Net (NYSE: CVH), a managed healthcare organization, is recently trading at $39 in pre-open trading, below its close of $43.

Humana (NYSE: HUM) lowered Q1 and 2008 guidance this morning and Wellpoint (NYSE: WLP), a health benefits company, lowered its full-year financial outlook on March 11.

CVH overall option implied volatility of 40 is above its 26-week average of 30 according to Track Data, suggesting larger price movement.

Health Net (NYSE: HNT), a managed care organization, is recently trading at $31.43 in pre-open trading, below its close of $34.58.

HNT overall option implied volatility of 45 is above its 26-week average of according to Track Data, suggesting larger price risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MOST NOTEWORTHY: The Managed Care sector, Keryx Biopharma and Citrix Systems were today's noteworthy downgrades:

• Goldman downgraded the Managed Care sector to Neutral from Attractive following WellPoint's (NYSE: WLP) reduced 2008 outlook. The firm said WellPoint's issues reflect a company specific underwriting error but also industry-wide pricing pressures which increase the risk of a cyclical slowdown in managed care. WellPoint was also downgraded to Neutral from Overweight at JP Morgan.
  
• Banc of America cut Keryx Biopharma (NASDAQ: KERX) to Neutral from Buy and lowered their target to $1.00 after Sulonex failed to meet its primary endpoint.
  
• Jefferies downgraded shares of Citrix Systems (NASDAQ: CTXS) to Hold from Buy, as they believe the first half of 2008 will be a tough year for software and are increasingly worried about the macro environment.

OTHER DOWNGRADES:

• Level 3 Comm (NASDAQ: LVLT) was downgraded to Underweight from Market Weight at Thomas Weisel.
  
• Texas Instruments (NYSE: TXN) was lowered to Neutral from Buy at Piper Jaffray.
  
• Credit Suisse removed Bunge Limited (NYSE: BG) from its U.S. Focus List.

Wellpoint (NYSE: WLP), a health benefits company, lowered its full-year financial outlook.

Goldman Sachs lowered its rating on WLP to Neutral from Buy. Goldman says: "WLP's problems reflect company-specific underwriting error, but also reflect industry-wide pricing pressures that are now combined with upward pressure on underlying cost trends."

WLP March option implied volatility is at 31; April is at 30; above its 26-week average of 24 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Readers of this space know that due to uncertainties regarding public policy at the federal level, the health care sector insurance has been avoided. But there are exceptions, and WellPoint is one.

WellPoint, Inc. (NYSE: WLP) is the U.S.'s largest health insurer.

Analysts expect WLP's revenue to increase 4-5% in 2008, driven by premium rate increases and higher enrollments. Enrollments are seen increasing about 2%, with impressive gains in Medicare and Medicaid accounts.

Meanwhile, a company exit from an unprofitable Ohio Medicaid program, and the shift to a fee-based account for Connecticut Medicaid will also help the bottom line.

The earnings crunch is in full swing, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• AT&T Inc. (NYSE: T) only met earnings expectations despite strong holiday iPhone sales.
• Bank of America (NYSE: BAC) earnings plunged 95% due to mortgage-related write-downs.
• Delta Air Lines Inc. (NYSE: DAL) narrowed its fourth quarter loss and beat expectations.
• eBay Inc. (NADSAQ: EBAY) beat low expectations, but the CEO is to step down in March.
• EI DuPont de Nemours & Co. (NYSE: DD) beat earnings expectations even thought profits fell 37%.
• E*Trade Financial Corp. (NASDAQ: ETFC), posted a bigger-than-estimated fourth quarter loss.
• Fifth Third Bancorp. (NASDAQ: FITB) missed estimates on acquistion costs and a one-time charge.
• Ford Motor Co. (NYSE: F) missed low expectations, prompting further domestic cost reductions.
• Harley-Davidson Inc. (NYSE: HOG) profit declined on weak domestic sales.
• Hershey Co. (NYSE: HSY) profit sank due to rising costs, competition, and management shakeups.
• Honeywell Internationl Inc. (NYSE: HON) only met estimates, despite growth in all business segments.
• Kimberly-Clark Corp. (NYSE: KMB) profit slipped bet met expectations, due to increased paper costs.
• Lennar Corp. (NYSE: LEN) reported a record quarterly loss due to the housing slump.
• Motorola Inc. (NYSE: MOT) profit plunged due to loss of market share, and it forcasts a first quarter loss.
• National City Corp. (NYSE: NCC) posted a bigger-than-expected loss, but shares rose anyway.
• Pfizer Inc. (NYSE: PFE) profit plunged, but beat estimates, due to increased competition for generics.
• UAL Corp. (NASDAQ: UAUA) narrowed its loss despite rising fuel prices and holiday cancellations.
• Wachovia Corp. (NYSE: WB) earnings plunged 98% due to home loan write-downs.
• WellPoint Inc. (NYSE: WLP) met earnings expectations and reaffirmed its 2008 outlook.

Abbott Laboratories (NYSE: ABT) announced that it swung to a profit in the fourth quarter from year-earlier results that were reduced by charges for acquisition costs. Abbott's drugs Humira, Depakote, TriCor, and Kaletra all posted double-digit sales gains.

For the quarter ending December 31, Abbott earned $1.2 billion, or 77 cents per share, compared with a loss of $476.2 million, or 31 cents per share, in the same period a year ago. Revenue rose to $7.22 billion from $6.22 billion, exceeding the $6.97 billion estimated by analysts polled by Thomson Financial.

Adjusted earnings, excluding certain items, rose to 93 cents per share, a penny better than analysts' consensus estimate. For the full year, Abbott earned $3.6 billion, or $2.31 a share, compared with $1.72 billion, or $1.12 a share, in 2006. Revenue increased 15% to $25.9 billion from $22.5 billion.

Shares were down about 2% to 56.20 by midday on Wednesday.

For more news on Abbott Labs, see BloggingStocks' Abbott coverage.

Kiplinger's has a clever article which pits Chicago against Indianapolis, not on the gridiron in Miami, but on the business playing field. Kiplinger's analyzes leading companies in five industries and concludes that Chicago beats Indianapolis:

• Health care, point Indianapolis. Kiplinger's likes Indianapolis's Eli Lilly & Co. (NYSE:LLY) over Chicago's Abbot Laboratories (NYSE:ABT) arguing that LLY's more profitable, has a deeper pipeline and sports a higher yield.
• Insurance, tossup. Kiplinger's thinks Indianapolis's Wellpoint Inc. (NYSE:WLP) and Chicago's The Allstate Corporation (NYSE:ALL) both have strong double digit growth and solid investments.
• Retailing, point Indianapolis. Kiplinger's tilts toward Indianapolis's Simon Property Group Inc. (NYSE:SPG) over Chicago's Walgreen Company (NYSE:WAG) contending that SPG's an outstanding REIT while WAG is just an average big drugstore chain.
• Manufacturing, point Chicago. Kiplinger's favors Chicago's The Boeing Company (NYSE:BA), Motorola, Inc. (NYSE:MOT) and Illinois Tool Works Inc. (NYSE:ITW) and suggests that Indianapolis has no players worth mentioning.
• Dining, point Chicago. Kiplinger's prefers Chicago's McDonald's Corporation (NYSE:MCD) over Indianapolis's The Steak n Shake Company (NYSE:SNS), concluding that MCD's margins and stock are rising while SNS's are flat.

I agree with Kiplinger's analysis of the victors in each industry. Of all the stocks in this group I like Allstate and McDonald's the best.

I'll be rooting for Chicago to win this year's Super Bowl since it's going against the team that took the New England Patriots out of the running this year. Kiplinger's is calling it Bears 27, Colts 16.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches Management at Babson College and edits The Cohan Letter. He has no financial interest in Abbot, Allstate, Boeing, Simon Property Group, McDonald's, Motorola, Walgreen or Wellpoint.

MOST NOTEWORTHY: Norfolk Southern and Abercrombie & Fitch were today's most notable upgrades.

• Citigroup upgraded shares of Norfolk Southern (NYSE: NSC) on valuation as they believe the recent weakness has brought shares to an attractive level.

• Merrill Lynch upgraded shares of Abercrombie & Fitch Co 'A' (NYSE: ANF), as the firm does not believe the stock's current valuation reflects the company's growth opportunities; additionally, the firm sees significant growth opportunities at the Hollister brand and expects free cash flow growth in 2007.

OTHER UPGRADES:

• Goldman Sachs upgraded Wellpoint Inc (NYSE: WLP) to Buy from Neutral, believing the company is better positioned in comparison to their peers to weather increasing price competition.

• Matrix USA upgraded TETRA Technologies (NYSE: TTI) to Buy from Hold, as Tetra continues to invest in expanding its well abandonment and decommissioning services in order to meet growing long-term demand forecasts, and its fluid division continues to benefit from higher bromine selling prices.

• JP Morgan added Outperform rated DivX Inc (NASDAQ: DIVX) to their Focus List.

• UBS upgraded Ingersoll-Rand (NYSE: IR) to Buy from Neutral.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).