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The Dow Now: Hewlett-Packard Hits 10-Year Low


Intel also hit a new 52-week low.

MINYANVILLE ORIGINAL After a strong Monday surge, US equities struggled to maintain their upwards momentum in spite of strong housing data as investors grew jittery in the wake of Hewlett-Packard's (NYSE:HPQ) disclosure of accounting improprieties. Stocks fell into the red in the morning before turning green by midday.

According to the Commerce Department, construction of new homes improved to a seasonally adjusted annual rate of 894,000 homes in October, beating economists' expectations of 836,000.

"We had a big rally yesterday; that may have been the result of an oversold condition. I'm a little concerned about yesterday - we had a lot of optimism all of a sudden based on some discussion that the fiscal cliff could be resolved before year end. And the consensus seems to be that what is going on in the Middle East is not all that troubling, as well," Bruce Bittles, chief investment strategist at Robert W. Baird, told MarketWatch.

The Dow Jones Industrial Average (INDEXDJX:.DJI) was up 0.07% to 12,804.31 points as of 12:04 p.m. EST.

Technology bellwether Hewlett-Packard made headlines earlier today with a disastrous quarterly report. The Palo Alto, California-based company posted a loss of $6.9 billion due chiefly to an $8.8 billion writedown of its Autonomy software unit for what HP described as "serious accounting improprieties" at Autonomy before its HP buyout. This was HP's second $8 billion writedown of the year. Shares of HP were down 10.72% to $11.87 as a result. Earlier in the morning, the stock fell to $11.35, its lowest level since October 2002.

"HP has become the 'quintessential value trap' as material negative news overrides any small positive developments and forward estimates continue to decline at a rapid rate," said ISI Group, which downgraded HP to Neutral from Buy.

Raymond James also downgraded shares of the company to Market Perform from Outperform, saying, "We can no longer rely on valuation support for a business that is deteriorating more quickly than we expected and where we have much lower confidence in the pace of the turnaround."

Fellow Dow tech giant Intel (NASDAQ:INTC) was weighed down by HP's woes, as it hit a new 52-week low of $19.50 before recovering slightly to $19.52 (-3.60%). Earlier, the company announced CEO Paul Otellini is set to retire, with an orderly leadership transition planned over the next six months. The company was subsequently downgraded to Neutral from Buy at UBS, which said Otellini's retirement would usher in a transitional period with an uncertain outlook.

Dow financials clung on to gains amidst a broader bear market. Bank of America (NYSE:BAC) (+1.69% to $9.65), JPMorgan (NYSE:JPM) (1.24% to $41.10), and American Express (NYSE:AXP) (+0.91% to $55.73) each advanced in intraday trading, while the bellwether Financial Select Sector SPDR ETF (NYSEARCA:XLF), which tracks all financial stocks in the S&P 500, was up 0.71% to $15.68.

After its disappointing third-quarter results led to a brief sell-off, shares of McDonald's (NYSE:MCD) have rebounded. Today, the defensive stock gained 1.12% to $86.00.

Twitter: @sterlingwong
No positions in stocks mentioned.
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