Stocks Finish Mixed; HP Weighs on Dow

Andrea Tse

NEW YORK (TheStreet) -- The major U.S. equity averages closed mixed Tuesday, paring losses that followed in the wake ofFederal Reserve Chairman Ben Bernanke weighing in on the fiscal cliff.

"Currently, uncertainties about the situation in Europe and especially about the prospects for federal fiscal policy seem to be weighing on the spending decisions of households and businesses as well as on financial conditions," Bernanke said in a speech before the Economic Club of New York. "Such uncertainties will only be increased by discord and delay."

The market was already weak ahead of the speech but stocks fell to session lows after Bernanke said he believes "coming together to find fiscal solutions will not be easy, but the stakes are high" and reminded investors that the federal debt limit also needs to be raised early in 2013.

While housing market data was positive once again, downcast news revealed in Dow heavyweight Hewlett-Packard's(:HPQ) latest quarterly results was a big headwind for the broad market as well.

The no. 1 PC maker fell short of Wall Street's revenue expectations and recorded a massive $8.8 billion charge in relation to its now-disastrous $10.3 billion acquisition of U.K. software maker Autonomy. Shares of HP, which is alleging Autonomy misrepresented its financials, fell 12%.

The Dow Jones Industrial Average dipped more than 7 points, or 0.06%, to close at 12,789. The blue-chip index, which rallied more than 1% on Monday, is now up 4.67% in 2012.

Winners outpaced losers within the Dow, 17 to 13. Bank of America(:BAC), American Express(:AXP), and Disney(:DIS) were all up more than 1%.

Aside from HP, the Dow's biggest decliners were Alcoa(:AA), Chevron(:CVX), and Intel(:INTC).

Intel shares fell 3.6% after the stock was cut to neutral from buy at UBS, which referenced uncertainties surrounding the chipmaker's CEO changes. The world's biggest semiconductor company surprised Wall Street Monday with the announcement that Paul Otellini is planning to retire as chief executive officer in May.

After Monday's close, JPMorgan named Marianne Lake as its next chief financial officer, succeeding Doug Braunstein, who is becoming the bank's vice chairman. Lake, currently the financial chief of the company's consumer and community banking business, is expected to transition into the CFO role during the first quarter of 2013.

The S&P 500 gained less than a point, or 0.07%, to settle at 1388, and the Nasdaq also rose less than a point, or 0.02%, to finish at 2902.

The weakest sectors in the broad market were technology, transportation and energy. Capital goods, financials, health care, services and consumer non-cyclicals closed in the green.

Advancers outpaced decliners on the New York Stock Exchange by a 1.3-to-1 ratio, but losers slightly beat winners by a 1.1-to-1 ratio on the Nasdaq. Volume totaled 3.20 billion on the Big Board and 1.59 billion on the Nasdaq.

Though she acknowledged the "post-election blues" continues, Mary Ann Bartels, head of U.S. technical analysis at Bank of America, said a year-end rally is "still a go" in commentary released Tuesday.

"The market is extremely oversold and with the seasonal positive bias in November and December we still expect a year-end rally. Regaining and holding the 200-day moving average is the first hurdle at 1382," said Bartels. "The next hurdle is getting above 1400-1405 and then 1430-1435 is needed to refresh the potential a sustained rally."

"But 2013 is setting up to be a volatile first half, in our view. A deeper correction is likely to occur due to the negative divergences still in place with market breadth and the transports," she added. "If 1346 does not hold the next levels of supports are 1325 to 1248."

The major U.S. stock averages soared Monday as better-than-expected housing market data gave extra mileage to a rally fueled by optimism over budget talks in Washington. Tuesday offered additional evidence of a housing market recovery.

The Census Bureau said that housing starts rose to a 894,000 annual rate in October from a downwardly revised 863,000 in September. It also reported that building permits fell to an annual rate of 866,000 in October from a downwardly revised 890,000 in September.

On average, economists were expecting housing starts of 840,000 and building permits of 865,000 for last month.

David Onyett-Jeffries, an economist at RBC Economics, said it "appears likely that the housing market will maintain this momentum during the coming months ... thereby supporting further increases in homebuilding and leading residential investment to make a positive contribution to the overall economy after acting as a drag in each of the last five years."

Earlier Tuesday, Richmond Federal Reserve Bank President Jeffrey Lacker, speaking in New York at the Shadow Open Market Committee's Fall Symposium, said that he is against the idea of linking labor market developments to the central bank's stimulus program because it could cause inflation levels to rise.

The FTSE 100 in London closed up 0.18%, while the DAX in Germany finished higher by 0.69%.

Japan's Nikkei average settled down 0.12% on Tuesday and Hong Kong's Hang Seng index closed down 0.16%.

Gold for December delivery slumped $10.80 to settle at $1,723.60 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts finished down $2.53 at $86.75.

The benchmark 10-year Treasury fell 16/32, boosting the yield to 1.671%. The dollar was down 0.16%, according to the U.S. dollar index.

In corporate news, Best Buy(:BBY) posted a third-quarter loss amid persistent sales weakness and charges tied to its restructuring plans. The stock fell 13%.

Krispy Kreme Doughnuts (:KKD) shares surged 1.8% after the company booked stronger earnings amid more robust same-store sales numbers.

Sunshine Heart (:SSH) shares gained 1.5% after the medical device maker was given unconditional approval to start a key trial for its implantable heart device by the U.S. Food and Drug Administration.

Campbell Soup(:CPB) posted better-than-expected first-quarter earnings of 88 cents a share, compared with the average analyst estimate of 85 cents a share, as the company generated sales growth both in its U.S. soup and sauces businesses, driven by new product introductions. The stock dipped 2%.

Ketchup maker H.J. Heinz(:HNZ) booked better-than-predicted fiscal second-quarter earnings as the company spoke of "dynamic growth" in the emerging markets and a favorable tax rate. Shares declined 2.2%.

Credit Suisse (:CS) said Tuesday it was overhauling its investment banking division and merging its private banking and wealth management arms to cut costs and satisfy regulators. The bank's American Depositary Receipts fell 1.4%.

Shares of Groupon(:GRPN) jumped 8.5% after hedge fund Tiger Global Management disclosed a stake of 65 million of the online deals company's class A shares.

-- Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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