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Overnight Markets: Wall Street flat after Bernanke's cliff warning
Shares declined after the Fed chairman said the central bank does not have the capability to cushion the economy from the impact of the fiscal cliff.
Wall Street snapped a two-day rally to close flat on Tuesday after Federal Reserve Chairman Ben Bernanke said the central bank does not have the capability to cushion the economy from the impact of the fiscal cliff.
The Dow Jones industrial average slipped seven points, or 0.06%, to 12,789 at the close. But the Standard & Poor's 500 Index edged up one point, or 0.07%, to finish at 1,388. The Nasdaq Composite Index inched up one point, or 0.02%, to close at 2,917.
In comments before the Economic Club of New York, Bernanke said the Fed lacks the tools to offset the damage that would result if politicians fail to hammer out a deal to avoid a series of mandatory tax increases and spending cuts scheduled to go into effect early next year.
The statement pressured stocks, but the market erased most of its losses before the close.
Moody's Investors Service's reduction of France's sovereign rating by one notch to Aa1 after the market's close on Monday added to the negative sentiment. The ratings agency cited an uncertain fiscal outlook as a result of the weakening economy.
Dow component Hewlett-Packard Co shares were the biggest drag after they plunged 12% to 10-year low. The computer and printer maker swung to a fourth-quarter loss and announced a $5 billion charge related to "accounting improprieties."
Best Buy Co fell 13% after the consumer electronics retailer reported a net loss of $13 million for the third quarter.
News Corp. edged up 0.2% after unveiling a deal to buy a 49% stake in the Yankees Entertainment and Sports Network, which broadcasts baseball and other sports.
In Asia, shares steadied on Wednesday after policymakers meeting in Brussels failed to reach a decision on assisting Greece.
The MSCI Asia Pacific Index (MXAP) fell 0.2% to 121 as of 1:05 p.m. Tokyo time. The MSCI Asia Pacific Excluding Japan Index dropped 0.4%. Japan’s Nikkei 225 Stock Average gained 0.3%. Hong Kong’s Hang Seng Index climbed 0.2%, while China’s Shanghai Composite fell 0.4%. South Korea’s Kospi Index declined 0.4% and Australia’s S&P/ASX 200 Index slid 0.3%.
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