Choppy Trading in New York, Bernanke Urges Congress to Act

Bikram Pandey
20 Nov, 2012
New York City

U.S. stocks closed mixed after a volatile session. Fed Chairman Bernanke stepped up pressure on the Congress to act to avoid fiscal cliff. Hewlett Packard plunged 12% after the latest accounting blunder raised effectiveness of the company board.

[R]4:10 PM, New York – U.S. stocks closed mixed after a volatile session. Fed Chairman Bernanke stepped up pressure on the Congress to act to avoid fiscal cliff. Hewlett Packard plunged 12% after the latest accounting blunder raised effectiveness of the company board.[/R]

U.S. indexes struggled in a choppy session after Fed Chairman Bernanke said central bank does not have tools to combat the full force of going off the “fiscal cliff.”

Bernanke stepped up pressure on lawmakers and said at the Economic Club in New York, “In the worst case scenario where the economy goes off the broad fiscal cliff, which according to CBO and to our own analysis, the Fed does not have the tools to offset that.”

He added the budget issue is already hurting the economy and urged Congress to agree to raise debt ceiling and avoid a “catastrophic default.”

In corporate news, HP swung to quarterly loss and blamed fraud at its $8.8 billion acquisition of the UK based Autonomy last year. The news at HP only gets worst as the company loses its leadership in the PC business and earlier in the year was forced to write down its $14 billion acquisition of EDS in 2008.

Meg Whitman, current CEO of the company blamed previous management at the company for the acquisition of Autonomy but company board was supportive and approved the purchase. Whitman was the board member at the time and supported the deal.

HP is in the process of shaving 29,000 jobs by the end of 2014 as the company battles competitions and strategic missteps and failed acquisitions in the last decade.

Memorial Production agreed to acquire certain oil and gas producing properties from Rise Energy for $271 million.

Agilent Technologies fourth quarter net climbed 47% and Campbell Soup first quarter net slumped 8%. Chico’s third quarter net soared 57%. HP fourth quarter net swung to $6.85 billion loss on impairment charges and Valspar net swung to $73.8 million profit.

Best Buy dropped 13% after the electronics retailer reported better than expected revenues but earnings were sharply lower than previously lowered estimates.

The European indexes traded sideways after French debt ratings were cut. Spain raised €4.9 billion from a short-term debt auction today. UK mortgage lending rose and German producer prices eased in October. Terra Firma agreed to acquire Annington for £3.2 billion.

Credit Suisse announced organizational changes. easyJet annual revenue rose 11.6% to £3.85 billion. Fiat Industrial sweetened bid offer for CNH Global. ING agreed to sell its investment management business in Thailand for €10 million.

Nikkei index in Tokyo traded down 0.1% after rallying 5.7% in four session and the yen strengthened after falling to a 7-month low. Shipping companies advanced after Baltic Dry Index gained for the seventh day in a row.

Australian stocks extended gains for the second day and the dollar eased. Resource companies led the advance on the back of rising commodities prices. Monadelphous guided 40% increase in first half sales and 25% increase in current year earnings. Virgin Australia held its profit outlook.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.66% and on 30-year bond rose to 2.81%.

The U.S. dollar inched lower to $1.281 to a euro and fell against the Japanese yen to 81.73 yen.

Immediate delivery futures of Texas crude oil decreased 2.20 to $87.08 a barrel and Brent crude fell $1.72 to $109.97, futures of natural gas increased 0.11 cents to $3.83 per mbtu and gasoline traded down 4.40 cents to 271.07 cents a gallon.

In metals trading, gold decreased $7.10 to $1,727.30 per ounce, silver decreased 5 cents to $33.14 and copper closed down 0.25 cents to $3.54 per pound.