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Stocks Mixed as Bernanke 'Fiscal Cliff' Remarks Weigh; Hewlett-Packard (HPQ) Plunges

 November 20, 2012 04:19 PM

(By Balachander) U.S. stocks ended on a mixed note as investors digested remarks from Federal Reserve Chairman Ben Bernanke on the looming "fiscal cliff" and some downbeat corporate results, including Hewlett-Packard.

The S&P 500 Index inched 0.07 percent higher to end at 1,387.82. The Dow Jones Industrial Average finished at 12,788.51, down 0.06 percent. The Nasdaq Composite Index added 0.02 percent to close at 2,916.68.

President Obama has pushed for higher taxes on wealthy Americans to address the fiscal cliff of roughly $600 billion in spending cuts and tax increases that could hit economic growth.

"If the economy goes off the broad fiscal cliff, I don't think the Fed has the tools to offset that," Bernanke said in a speech to the Economic Club of New York.

[Related -Should You Buy HP's Stellar Rebound?]

"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," Bernanke said. "Indeed, by the reckoning of the Congressional Budget Office (CBO) and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession."

On the domestic data front, housing starts in the United States rose 3.6 percent to 894,000 for October, while permits for future building construction decreased 2.7 percent to 866,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Economists' expected housing starts at 840,000 and building permits of 865,000.

Eurozone finance ministers met in Brussels for another round of talks on Greece, with reports indicating a tentative approval of the next round of aid to the debt-stricken country.

[Related -Coca-Cola Company (KO) Dividend Stock Analysis]


In corporate news, Hewlett-Packard Co. (NYSE: HPQ) tumbled 11.95 percent after the world's largest seller of personal computers issued a downbeat earnings forecast backed by a weaker-than-expected quarterly revenue. HP recorded a charge of $8.8 billion related to its purchase of developer of search-software Autonomy Corp. Plc last year.

Best Buy Co. Inc. (NYSE: BBY) plunged 13.02 percent after the consumer electronics giant posted a quarterly loss due to restructuring charges primarily related to store closures. The company's adjusted earnings missed Wall Street expectations.

Groupon Inc. (NASDAQ: GRPN) jumped 8.53 percent after hedge fund Tiger Global Management acquired a 9.9 percent stake in the daily deal website.

Campbell Soup Co. (NYSE: CPB) fell 2.00 percent after the company posted weaker-than-expected sales for the first quarter. Its net income fell 7.5 percent as expenses rose and margins contracted.

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) gained 1.98 percent after the specialty coffee maker appointedCoca-Cola (NYSE: KO) executive Brian Kelley as its chief executive officer, effective December 3.

H.J. Heinz Co. (NYSE: HNZ) dropped 2.20 percent following the ketchup and soups maker's second-quarter results. Sales of $2.83 billion came in short of market expectations.

Patterson Companies Inc. (NASDAQ: PDCO) slumped 8.41 percent after the distributor of dental products and veterinary supplies reduced its earnings outlook for the full year as second-quarter earnings declined 7 percent.

Teavana Holdings Inc. (NYSE: TEA) dropped 4.47 percent. The Atlanta, Georgia-based retailer of loose-leaf teas, which agreed to be acquired by Starbucks Corp. (NASDAQ: SBUX), has responded to allegations made by certain short sellers.

Krispy Kreme Doughnuts (NYSE: KKD) spiked 23.47 percent after the doughnut chain lifted its earnings forecast following strong quarterly same-store sales.

Shoe Carnival Inc. (NASDAQ: SCVL) lost 11.21 percent after the footwear retailer guided fourth-quarter earnings below consensus estimates.

Global Markets

European markets ended higher despite Moody's downgrading France's credit rating from its coveted AAA to Aa1 rating due to worries about economic weakness. Germany's DAX advanced 0.69 percent to close at 7,172.99. France's CAC40 rose 0.65 percent to finish at 3,462.06. The U.K.'s FTSE 100 gained 0.18 percent to end at 5,748.10.

Among Asian markets, China's Shanghai Stock Exchange Composite Index declined 0.40 percent to finish at 2,008.92. Japan's Nikkei 225 shed 0.12 percent to end at 9,142.64. Hong Kong's Hang Seng Index dipped 0.16 percent to end at 21,228.28. India's BSE Sensex ended at 18,329.32, down 0.05 percent.

Commodity & Currency Scan

Crude oil futures dropped 2.48 percent to $87.07 per barrel, while natural gas futures added 3.09 percent to $3.83 per million metric British thermal units. Gold futures shed 0.41 percent to $1,727.3 per ounce and silver futures slipped 0.21 percent to $33.12 per ounce.

In the currency market, the euro added 0.03 percent against the U.S. dollar to 1.2818. The British pound gained 0.10 percent against the greenback to 1.5925, and the dollar rose 0.28 percent against the Japanese yen at 81.6500.



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