Hewlett-Packard, Bernanke Drag Dow Lower

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The Dow Jones Industrial Average (DJI) spent time on both sides of breakeven today, as Wall Street weighed another round of upbeat housing data against ugly earnings and global economic concerns. More specifically, solid housing starts translated into an early boon for stocks, helping to overshadow an overseas downgrade and an acquisition-related hit to Hewlett-Packard ( HPQ ) earnings. However, a few bulls hit the exits once Fed Chairman Ben Bernanke took the stage, with the central banker lecturing Congress on the risks of playing politics ahead of the fiscal cliff.

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The Dow Jones Industrial Average (DJIA) explored a range of more than 107 points, topping out just above 12,800 around midday. The index tested its footing in the 12,700 neighborhood after Bernanke took the podium, but ultimately pared its losses to 7.5 points, or 0.06%, to end a second straight session atop its 10-day trendline. Among the Dow's 30 components, Bank of America ( BAC ) paced the 18 advancing equities, tacking on 1.5%, while Hewlett-Packard ( HPQ ) led the laggards with an earnings-induced slide of 12%.

Elsewhere, the S&P 500 Index (SPX) traded on both sides of breakeven, ultimately finishing with a gain of 0.9 point, or 0.07%, to maintain a perch atop its 200-day moving average. Likewise, the Nasdaq Composite (COMP) erased its intraday deficit in the final minutes of trading, adding 0.6 point, or 0.02%, to notch another win north of its own 10-day trendline.

The CBOE Market Volatility Index (VIX) ended fractionally lower to settle near a session nadir, marking its second consecutive close south of 16.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take

"The markets were greeted with a Moody's downgrade of France , but shook it off rather well," said Schaeffer's Senior Equity Analyst Joe Bell. "After a nice bounce back yesterday, the markets were mixed as we get one day closer to Thanksgiving. With many participants preparing and traveling for the holidays, a decline in volume tomorrow would not be a surprise."

Economic and Earnings News

Fed Chairman Ben Bernanke thinks 2013 could be a "very good year" for the U.S. economy -- but only if lawmakers put aside their differences and reach an agreement to sidestep an imminent fiscal disaster, and sooner rather than later.

"While the details of whatever agreement is reached to resolve the fiscal cliff are important, the economic confidence of both market participants and the general public likely will also be influenced by the extent to which our political system proves able to deliver a reasonable solution with a minimum of uncertainty and delay," said Bernanke, addressing the Economic Club of New York. "Finding long-term solutions that can win sufficient political support to be enacted may take some time, but meaningful progress toward this end can be achieved now if policymakers are willing to think creatively and work together constructively."

Housing starts rose 3.6% in October to a seasonally adjusted annual pace of 894,000, said the Commerce Department, surging past Thomson Reuters' consensus estimate for a downturn to 840,000. Housing starts haven't climbed that high since July 2008. Meanwhile, building permits declined 2.7% to 866,000, but still exceeded economists' expectations for a dip to 865,000.

STOCKS - EARNINGS

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In the Options Pits

STOCKS - MOVERS

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities

Oil futures finished solidly in the red today, as traders priced in expectations for a Gaza Strip cease-fire. Following two straight days of gains inspired by geopolitical turmoil, crude for January delivery dropped $2.53, or 2.8%, to settle at $86.75 per barrel.

Gold futures also backtracked, moving inversely to a stronger U.S. dollar. December-dated gold gave up $10.80, or 0.6%, to finish at $1,723.60 per ounce.

SCHAEFFER'S MARKET POSTURE

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This article appears in: Investing , Options

Referenced Stocks: BAC , GRPN , HPQ , INTC , UNH

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