A day after Monday's 200-point bull run, things cooled off on Wall Street as the Dow Jones Industrial Average (DJINDICES:^DJI) fell slightly, by 7 points, or 0.06%. More good news came out of the housing sector today, as housing starts hit a four-year high at 894,000 in October, further evidence that the real estate market is helping to lift the economy. New building permits, more of a leading indicator, fell slightly to 866,000.
After a brief respite yesterday, the fiscal cliff came back into focus this afternoon, after Federal Reserve Chairman Ben Bernanke urged Congress to quickly come up with a fix for the automatic tax increases and spending cuts. "A fiscal shock of that size would send the economy toppling back into recession," the chairman said, not mincing words. Bernanke did inject some optimism into the discussion, saying that with a solution to the cliff, there are economic pieces in place that could bring a boom in 2013.
Looking at individual stocks, two Dow tech stalwarts got slammed today. Hewlett-Packard (NYSE:HPQ) fell 12% after the PC-maker revealed in its earnings report that it's taking an $8.8 billion charge on what it claimed was fraudulent accounting in its 2011 acquisition of Autonomy, a U.K. software-maker. HP said Autonomy had recognized some bogus sales and mischaracterized others, and that it therefore overpaid for the purchase. CEO Meg Whitman asked the SEC and its U.K. equivalent to investigate the matter. The news only added insult to injury for HP shareholders. The $8.8 billion figure remarkably represents more than 40% of the company's market cap. Leaving the writedown aside, adjusted earnings were $1.16 per share on revenue of $30 billion, down 7% from a year ago.
Shares of Intel (NASDAQ:INTC) got hammered as well, falling 3.6% on a downgrade from "buy" to "neutral" by UBS following the announcement that its CEO plans to retire. The analyst, Steven Eliscu, said ntel has been unable to successfully transition into mobile, and that the company's decision to search outside its ranks for a new leader casts further doubt on its ability to penetrate the mobile market.
Expect light trading the rest of the week because of the Thanksgiving holiday, though a number of economic reports will be released tomorrow, including initial unemployment claims and consumer sentiment data. Meanwhile, the biggest shopping day of the year awaits retailers on Black Friday. Wal-Mart (NYSE:WMT) is busy fending off a labor dispute as employees at 1,000 of its stores are planning to walk out on Friday, partially in response to the retailer's decision to open at 8 p.m. on Thanksgiving night. The retail giant has asked the National Labor Relations Board to block the strike.
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