Stock markets started the day higher as Federal Reserve Chairman Ben Bernanke testified before Congress, but the mood quickly changed when he mentioned pulling back on bond purchases. Bernanke hinted that the Fed could slow down purchases in the next few months -- what's being called "tapering" -- if the job market continues to improve and the economy doesn't slow down. Stocks quickly dropped, and as of 3:15 p.m. EDT the Dow Jones Industrial Average (DJINDICES:^DJI) is off 0.47%, while the S&P 500 (SNPINDEX:^GSPC) is down 0.84%.
Pfizer (NYSE:PFE) is one of only a few companies to buck the trend today, climbing 2%. Shareholders were offered the option to exchange shares of Pfizer for shares of Zoetis (NYSE:ZTS), an animal-health company Pfizer is fully spinning off. Shares were offered at a 7% discount to shareholders who participate, and on June 19 the company will announce the final ratio shareholders will receive. This is part of an effort to sell assets that don't align with Pfizer's efforts to focus on human drugs and vaccines. In the end, it will help reduce Pfizer's shares outstanding.
After the market closes this afternoon, Hewlett-Packard (NYSE:HPQ) will release its much-anticipated fiscal-second-quarter earnings results. Analysts are expecting revenue to drop nearly 9% to $28 billion and earnings per share to fall to $0.81 from $0.98 a year ago. Investors will be focusing on how fast the PC business is declining and judging whether or not HP's other businesses will be able to pick up the slack going forward. This is still a high-risk stock, and I'd expect a strong reaction tomorrow based on whether results beat or miss expectations.
Finally, commodities took a major hit today following Bernanke's comments. Gold is down 1.5%, and oil has fallen 0.9% today. The drop in gold is no surprise, because one of the theories about the shiny metal is that it becomes more valuable as the Fed prints more money. If the Fed stops printing, that thesis holds less water and will cause gold to drop. Tighter monetary policy is also pushing oil down, and recent government reports show that there's more than enough supply in the market.