On Tuesday, stock indices on Wall Street remained nearly unchanged as investors were cautioned by Federal Reserve Chairman Ben Bernanke, who warned that the central bank has no tools to combat the ‘fiscal cliff’.
The Dow Jones index fell by 0.06 percent to 12,788 points, while the S&P 500 rose by 0.07 percent to 1,387 points, and the Nasdaq index increased by 0.02 percent to 2,916 points.
The chairman of the central American bank, Bernanke, stated yesterday at the New York Economic Club that the Fed has no means to repair the damage that would occur if politicians fail to reach an agreement to avoid automatic budget cuts and tax increases.
This brought investors back down to earth after stock prices had surged in the previous two days on the wings of statements from Republicans and Democrats that they were willing to compromise on budget items to avoid the ‘fiscal cliff’ at the beginning of 2013.
Investors were also shaken yesterday by Moody’s decision to downgrade France’s top credit rating by one notch due to uncertain fiscal prospects, given the weakening economy. This reminded investors that the debt crisis in the eurozone is still far from resolution.
Among the biggest losers yesterday was Hewlett-Packard’s stock as the tech giant announced an $8.8 billion write-down due to inadequate balances in the British software company Autonomy that it once acquired.
HP’s stock price plummeted by 12 percent, diving to its lowest level in 10 years. The market value of the company now stands at only $23 billion, while just two years ago it was around $100 billion.
On the other hand, the biggest winner yesterday was the construction sector as news of a recovery in the American real estate market has been rolling in over the past few days. The PHLX index of that sector jumped by 2.5 percent.
