After gaining as much as 81 points in midday trading, the Dow Jones Industrial Average (^DJI -0.13%) finished essentially flat as the market blew off the Federal Reserve's latest stimulus decision. The blue chips finished down 3 points, or 0.02%.
In its eight-times-a-year Open Market Committee meeting, the central bank announced a new program to buy $45 billion in treasury bonds a month, replacing the expiring Operation Twist that provide the same stimulus, and comes on top of an initiative in September to buy $40 billion a month in mortgage-backed securities. The replacement treasury-buying program was widely expected by investors, but Chairman Ben Bernanke finally provided a finish line for the Fed's growth-oriented policies, saying current rates will persist until unemployment hits 6.5% or inflation reaches 2.5%. In the past, the Fed had essentially said that it would maintain low rates for as long as necessary. Bernanke did not seem optimistic about improved growth, however, saying that he expected it to take at least three years to reach the unemployment target.
On the Dow today, Wal-Mart (WMT 1.20%) was the biggest mover, falling 2.8% after its CEO said that concerns about the fiscal cliff were hurting the Christmas shopping season. According to company surveys, 15% of the retail giant's customers will cut back on their spending because of the cliff. The stock was also sinking on allegations that the company had engaged in lobbying in India, where the practice is illegal. Wal-Mart has denied any wrongdoing, and has not yet opened any stores in the world's second-biggest country.
Hewlett-Packard (HPQ 1.43%) was the biggest gainer, jumping on 1.9% on continued rumors that activist investor Carl Icahn was taking a stake in the company. Today, the PC maker also won a contract to provide 1.5 million laptops to students in India, and CEO Meg Whitman got a vote of confidence from board member Marc Andreessen, who said she was the right person for the job, calling her "the best CEO since the founders."
Dupont (DD) was also strong today, jumping 1.4% after releasing its 2013 outlook last night. The chemical maker said it expects to hit the high end of its $3.25-$3.30 guidance this year, and saw profits growing by the low-to-mid single digits next year. The 2013 figure was below analyst expectations, but the company also promised $1 billion in share buybacks, which will boost earnings per share. Dupont also said it would cut back on capital expenditures due to the fiscal cliff.
In other news, Pfizer (PFE -0.17%) was down 0.5% on news that it would pay $55 million to settle a drug rebranding case. The settlement with the Department of Justice comes in response to accusations that the pharma giant marketed its Protonix for uses other than those sanctioned by the FDA.
Finally, fiscal cliff negotiations appeared to be stalling once again as House Speaker John Boehner said there were still serious differences to work out. Meanwhile, several top CEOs signaled they would accept higher taxes on the wealthy, an important step toward compromise.
Hewlett-Packard reached its highest point in nearly two months on today's news. Find out what's in store for the volatile PC maker in our new premium research report, which details the opportunities and risks facing the Silicon Valley veteran. As a bonus, this analysis comes with a year's worth of free updates so you won't have dig around for meaningful coverage of important news events. Pick up your copy of this invaluable insight today. All you have to do is click right here.
