Stocks end flat after HP shocker and Fed warning

Joseph Mas­tro­lia, left, a trader with Bar­clays, and Chris Casaliggi, Euronext floor man­ager, begin early trad­ing on the floor of the New York Stock Exchange on Tues­day. (AP Photo/Bebeto Matthews)

Asso­ci­ated Press

NEW YORK — Falling oil prices and a sur­prise announce­ment from Hewlett-Packard weighed on tech­nol­ogy and energy stocks Tuesday.

HP plunged 12 per­cent after exec­u­tives said that a com­pany HP bought for $10 bil­lion last year lied about its finances. CEO Meg Whit­man said that there were “seri­ous account­ing impro­pri­eties” at the search-engine com­pany, Autonomy.

To account for it, HP took an $8.8 bil­lion charge in its lat­est quar­ter. HP’s stock lost $1.59 to $11.71.

A warn­ing from the Fed­eral Reserve chair­man, Ben Bernanke, about the dan­gers of the “fis­cal cliff” also weighed on the mar­ket in after­noon trad­ing. The Dow Jones indus­trial aver­age dropped as much as 94 points shortly after Bernanke spoke.

But the stock mar­ket crept higher through the late after­noon and ended the day flat. The Dow dropped 7.45 points to close at 12,788.51. The Stan­dard & Poor’s 500 index gained 0.92 point to 1,387.81.

On Mon­day, the Dow soared 207 points as investors focused on prospects for a deal between the White House and con­gres­sional Repub­li­cans to avoid the cliff, tax increases and gov­ern­ment spend­ing cuts set to take effect Jan. 1.

In a speech to the Eco­nomic Club of New York on Tues­day, Bernanke urged Con­gress to take action. Asked in a Q&A ses­sion whether the Fed could limit the eco­nomic hit posed by the budget-tightening mea­sures, Bernanke said: “If the econ­omy goes off the broad fis­cal cliff, I don’t think the Fed has the tools to off­set that.”

Many investors expect finan­cial mar­kets to turn tur­bu­lent when Con­gress returns from its Thanks­giv­ing recess and begins bar­gain­ing with the White House to avoid the fis­cal cliff.

John Lina­han, head of T. Rowe Price’s U.S. equity group, said that if those nego­ti­a­tions stretch into late Decem­ber, the stock mar­ket could resem­ble the wild trad­ing of August 2011, when mar­kets flipped from big gains one day to steep losses the next.

Energy stocks and the price of crude oil fell after the pres­i­dent of Egypt pre­dicted that Israel’s week­long offen­sive in the Gaza Strip would end in hours and the Israeli prime min­is­ter said Israel would be a “will­ing part­ner” to a cease-fire.

Crude oil was down $2.53, or 2.8 per­cent, to $86.75 per bar­rel. It traded above $89 ear­lier in the day. Energy stocks in the S&P slipped 0.4 per­cent as a group. Tech stocks fared the worst, los­ing 0.6 percent.

The Nas­daq com­pos­ite index gained 0.61 of a point to 2,916.68. The yield on the bench­mark 10-year U.S. Trea­sury note rose to 1.66 percent.

Among stocks mak­ing headlines:

— Hormel Foods dropped $1.25, or 4 per­cent, to $30.05 after its earn­ings and rev­enue fell below Wall Street expec­ta­tions. The com­pany said sales of Spam remained strong, and it increased its annual div­i­dend 13 per­cent, to 68 cents per share.

— Best Buy fell $1.79, or 13 per­cent, to $11.96, its low­est in more than a decade. The com­pany, which has strug­gled for years against increased com­pe­ti­tion from online elec­tron­ics retail­ers, turned in another dis­mal earn­ings report.

— Krispy Kreme Dough­nuts climbed $1.77, or 23 per­cent, to $9.31 after it fore­cast earn­ings for 2013 above what Wall Street was expecting.

— Green Moun­tain Cof­fee rose 54 cents, or 2 per­cent, to $27.87 after pick­ing a new CEO, Brian Kel­ley of Coca-Cola.

— Groupon gained 27 cents, or 9 per­cent, to $3.37 after a hedge fund, Tiger Global, said it had bought a 10 per­cent stake in the company.

Posted by AP News on Nov 20 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.