Today's market action looked quite ugly at times, as investors tried to digest comments from Federal Reserve Chairman Ben Bernanke that realistically showed the limitations of the Fed in dealing with any economic fallout from the ongoing fiscal cliff crisis. Initially, this afternoon's reminders of the Fed's finite powers sent stocks plunging, with the Dow Jones Industrials (^DJI +0.24%) falling triple digits briefly. By the end of the session, though, stocks recovered sharply, and the Dow finished with a seven-point loss while broader market benchmarks actually gained on the day.
But the Dow owes no thanks to two tech giants that acted as lead weights on the average today. Hewlett-Packard (HPQ +2.55%) finished with a drop of nearly 12% after the company said that it will take a massive charge against its earnings because of an alleged "willful effort by Autonomy to mislead shareholders" during the due diligence that led up to HP's purchase of the software company. Out of $8.8 billion in total charges, $5 billion were allocable to Autonomy. The scandal is an unwelcome distraction as HP tries to recover from a long series of setbacks for its core business.
Intel (INTC +5.48%) also posted big losses, falling 3.6%. Some analysts tried to tie the gains to the coming departure of CEO Paul Otellini, but the fact that the stock initially climbed yesterday morning on that news makes that theory tough to accept as a complete explanation. Yet one unresolved question is whether Intel will hire from within or look for outside help to try to move beyond its core PC strength to get onto the mobile bandwagon. Either way, Intel faces a difficult road to catch up with rival ARM Holdings (ARMH +0.00%) and other companies that have moved into mobile much more quickly than Intel.
Finally, Alcoa (AA +0.00%) lost about 1%. The company didn't have any apparent news moving the stock, but the aluminum giant's continuing struggles to survive and grow in a weak global macroeconomic environment are straining investors' patience. A resolution to the fiscal cliff would probably help the stock, but what Alcoa really needs is a sustained recovery in key emerging markets where metals-heavy infrastructure construction plays a big role in overall economic growth.
