The Standard & Poor’s 500 Index fell, after yesterday’s rally, as Hewlett-Packard Co. tumbled and Federal Reserve Chairman Ben S. Bernanke said the central bank’s ability to offset headwinds is “not infinite.”
HP slumped 12 percent as it announced a charge of $8.8 billion linked to its Autonomy Corp. business, saying there were “accounting improprieties” before its 2011 acquisition of the company. Best Buy Co. declined 13 percent as the largest consumer-electronics retailer reported a $10 million loss amid weaker-than-expected sales. Intel Corp. dropped 4.3 percent after UBS AG cut its rating for the largest chipmaker.
The S&P 500 fell 0.3 percent to 1,383.34 at 2:58 p.m. New York time. The benchmark index climbed 2 percent yesterday. The Dow Jones Industrial Average slid 45.95 points, or 0.4 percent, to 12,750.01. Trading in S&P 500 companies was almost in line with the 30-day average at this time of day.
“Bernanke’s comment was a polite way of telling Congress that they should not kick the can down the road,” John Manley, who helps oversee about $207.5 billion as chief equity strategist for Wells Fargo Advantage Funds in New York. He spoke in a telephone interview. “While the disappointment in HP is putting pressure on the market, these may be HP’s issues and not indicative of the overall economy. Europe is working on a solution, the issue is how quickly they get there. It’s an incredibly volatile market.”
Fed Chairman Bernanke said an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth, while failure to avoid the so-called fiscal cliff would pose a “substantial threat” to the recovery.
“Cooperation and creativity to deliver fiscal clarity --in particular, a plan for resolving the nation’s longer-term budgetary issues without harming the recovery -- could help make the new year a very good one for the American economy,” Bernanke said in remarks to the Economic Club of New York at the Marriott Marquis Hotel in Times Square. “The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery.”
Stocks capped a two-day rally yesterday amid better-than- forecast housing data and as President Barack Obama expressed confidence on a budget agreement with Congress.
Housing starts in October rose to a four-year high. European finance ministers will try to plug a 15 billion-euro hole in Greece’s finances and win over the International Monetary Fund in the latest installment of three years of debt- crisis brinkmanship. Luxembourg Prime Minister Jean-Claude Juncker, who will oversee the finance-chief meeting, said he sees “good chances” of a deal being struck tonight.
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