HP's earnings warning puts dent in market

Stocks end higher, but Hewlett-Packard falls to a 10-year low as CEO Whitman warns of a 'fix-and-rebuild' year ahead. ADP says the private sector added 162,000 jobs in September. Low rates spur mortgage applications. Oil falls under $89.

By Charley Blaine Oct 3, 2012 12:37PM
Charley BlaineUpdated: 11:32 p.m. ET

Stocks ended the day higher, but what had been a solid rally faded substantially as an earnings warning from Hewlett-Packard (HPQ) and disappointment with the terms of a cellphone merger dismayed investors.

Decent reports on the jobs market and the non-manufacturing economy had led the market to an early surge, along with a report showing an upswing in mortgage applications as borrowers sought to take advantage of low rates.

Futures trading suggests a solid rally on Thursday. Part of that gain may be some investor reaction to Mitt Romney's performance in tonight's debate with President Barack Obama. Earlier in the evening, futures had signaled a flat open.

Initial reactions were that Romney had the better night. On Intrade.com, trading by speculators on the outcome of the election, sold down Obama's odds to 67.7% from 74.5% on Tuesday and nearly 79% on Saturday.

The Dow Jones industrials ($INDU) closed up 12 points to 13,495; the blue chips had been up as many as 54 points. Still, the gain was a rebound from Monday's decline of 33 points. The Standard & Poor's 500 Index ($INX) was up 5 points to 1,451. And the Nasdaq Composite Index ($COMPX) gained 15 points to 3,135.

Article continues below.
The Nasdaq-100 Index ($NDX) gained 20 points to 2,819. Apple (AAPL), whose rebound late Tuesday pushed the index into the black on the day, was up $10.14 to $671.45. The gain was fueled by speculation the company will introduce a 7-inch version of its iPad tablet by Halloween.

Google (GOOG) was up $5.51 to $762.50, not far from its all-time intraday high of $765.99.

Microsoft (MSFT) and Amazon.com (AMZN) were also higher. (Microsoft publishes MSN Money.)

The difficult story at Hewlett-Packard
Hewlett-Packard fell $2.22 to $14.91, its lowest close since November 2002. CEO Meg Whitman warned at an investor conference in San Francisco that fiscal 2013 will be a "fix-and-rebuild year" and cut the company's earnings guidance well below Street estimates.

HP expects revenue in its fiscal year beginning Nov. 1 to fall in each of its largest businesses and forecasted a big drop in profits, excluding one-time charges. It reported $127 billion in revenue in its 2011 fiscal year.

"The single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices, and frankly some significant executional miscues," Whitman told the audience. "This is important because, as a result, it is going to take longer to right this ship than any of us would like."

HP's decline subtracted nearly 17 points from the Dow. The stock is down about 50% from its February high and 79.8% from its closing peak of $74.06, set on April 6, 2000.

T-Mobile and MetroPCS to merge
Also not helping matters was the announcement that T-Mobile, the U.S. arm of Deutsche Telekom (DTGEY), will merge with MetroPCS (PCS), creating the fourth-largest cellphone carrier. MetroPCS shareholders will get $1.5 billion in cash and stock in what will be a new company.

But investors pushed MetroPCS shares down $1.33 to $12.24 because they'd hoped T-Mobile would simply gobble up MetroPCS.

3M, Avery Dennison cancel a deal; Applied Materials announces job cuts
After the close, 3M (MMM) said it had terminated its $550 million agreement to buy Avery Dennison's (AVY) office-products business. The deal fell apart because the Justice Department had opposed the deal on antitrust grounds.

The Justice Department’s investigation found that 3M and Avery have dominated adjacent parts of the office products business for many years, with Avery making labels and 3M selling sticky notes under its Post-it brand, Bloomberg News noted.

Marriott International (MAR) shares were up 1.9% to $39.72 after hours, despite trimming back its earning guidance. The big hotel operator reported a higher-than-expected quarterly profit after the close as its corporate business showed strength. The shares were up 37 cents to $39 in regular trading.

Shares of chip-equipment-maker Applied Materials (AMAT) were unchanged at $11.16 after hours. The company will cut 900 to 1,300 workers. The move was prompted by lackluster personal-computer demand that has led customers to slow orders for manufacturing tools.

Futures trading suggests stocks open slightly on Thursday. The Presidential debate tonight may move markets, however.

The day includes minutes from the September Federal Reserve meeting and the weekly report on jobless claims. The banks of Japan and England and the European Central Bank will announce policy decisions.

The market is stuck
The Dow's gain was part of a pattern of alternating down-and-up days over the past six sessions. But the S&P 500 has risen for three days in a row. The Nasdaq's gain was its second in a row.

But the major averages appear stuck in trading ranges. The Dow has traded between 13,000 and 13,600 since July 27. The S&P 500 has traded between 1,400 and 1,460 since Aug. 7, and the Nasdaq's range has been 3,000 to 3,200 since Aug. 7.

While there is some frustration about the major averages, the Dow Jones Transportation Average ($DJT) was up 58 points to 4,966. United Continental Holdings (UAL), Delta Air Lines (DAL) and Jet Blue Airways (JBLU) were the leaders, thanks to lower oil prices and possibly the sense the economy is not falling apart.

Energy prices -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Crude oil (-CL)

$88.14

$91.89

-4.39%

-10.82%
(per barrel)











Heating oil (-HO)

$3.0664

$3.1255

-2.94%

5.22%
(per gallon)











Natural gas (-NG)

$3.3950

$3.5310

2.26%

13.58%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7995

$2.8692

-4.13%

5.35%
(per gallon)











Brent crude 

$108.17

$111.57

-3.75%

0.74%
(per barrel)











Retail gasoline

$3.7820

$3.7800

-0.13%

15.45%
(per gallon; AAA)












Crude oil falls nearly to $88
The market's gains came as a rising dollar pushed energy prices and energy stocks lower. Light sweet crude oil (-CL) settled down $3.75 to $88.14 a barrel, its lowest close since Aug. 2. Brent crude was trading at $107.89 a barrel, down $3.68.

The national average retail price of gasoline was $3.782 a gallon, up slightly from Tuesday's $3.78 a gallon, according to AAA's Daily Fuel Gauge Report.

Chevron (CVX) was the second-worst Dow performer, falling $1.82 to $116.14. Exxon Mobil (XOM) fell slightly to $91.70.

A big exception to the trend was Murphy Oil (MUR), up $2.31 to $58.21 on news that hedge-fund manager Daniel Loeb has built a sizable position in the stock and wants to expand. According to CNBC's Kate Kelly, he argues Murphy has a cumbersome business and would do well to sell such operations as its gas stations, refining operation in the United Kingdom and natural gas assets in Canada.

Gold (-GC) settled up $4.20 to $1,779.80 an ounce in New York, and silver (-SI) rose 2.1 cents to $34.69 an ounce.

The 10-year Treasury yield was up slightly to 1.623% from Tuesday's 1.615%.

ADP reports jobs growth -- with a catch
The ADP National Employment report estimated that private-sector employers added 162,000 jobs in September, more than the expected 140,000. There was a downside: ADP trimmed its estimates for job growth in July and August.

The ADP report is widely watched as a hint of what to expect from Friday's big jobs report from the Labor Department. Analysts expect overall growth of around 100,000 with the unemployment rate holding at 8.1% or possibly rising.

At the same time, the Institute for Supply Management's non-manufacturing index came in at 55.1%, better than expected, thanks to gains in new orders. As with the ADP report, the index showed a slippage in employment growth.

Stocks ended mixed across Europe and Asia earlier today. Chinese services industries expanded at the weakest pace since at least March 2011 in September. At the same time, Bloomberg News noted, eurozone services and manufacturing output contracted for the eighth straight month.

Housing leads the market
The market was helped by a big surge in mortgage applications, for both purchases of homes and refinancings, as borrowers sought to take advantage of the Federal Reserve's vow to keep rates at "exceptionally low levels" until at least 2015.

Homebuilding shares were the leading group in the market. Lennar (LEN), up $2.42 to $37.41, and D.R. Horton (DHI), up $1.28 to $21.99, were the second- and third-best S&P 500 performers. PulteGroup (PHM), up 94 cents to $16.50, was fifth. Ryland (RYL) added $1.67 to $31.48.

Best Buy
(BBY) rose 79 cents to $17.76 after Reuters reported the consumer electronics retailer's founder and at least four other private-equity firms are examining the company's books, which could lead to a buyout proposal. The gain was the sixth-best among S&P 500 stocks.

Some trades in Kraft Foods Group (KRFT), which is listed on the Nasdaq stock market, were ruled "clearly erroneous" and canceled. The shares closed down 55 cents to $44.87. The busted trades, in the first minute of the session, would have put the stock more than $12 higher from its latest price. Kraft Foods Group is the grocery business of Kraft Foods, which has split itself in two. The other business is Mondelez International (MDLZ), whose brands include Oreo cookies and Cadbury chocolate. Its shares were down 18 cents to $27.83.

Netflix (NFLX) was the top S&P 500 and Nasdaq-100 performer, climbing $6.12 to $62.58 after Citigroup analysts reiterated their recommendation to buy the shares.

Family Dollar Stores (FDO) rose $2.56 to $68.56 after the discount retailer reported fiscal-fourth-quarter earnings and revenue that were in line with estimates, and provided a somewhat upbeat earnings outlook for fiscal 2013.

Twenty-one Dow stocks were higher on the day, led by Home Depot (HD), a beneficiary of the hopes for housing. And 303 S&P 500 stocks were ahead, along with 60 Nasdaq-100 stocks.

Short hits from the markets -- New York close



Wed.

Tues.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.090%

0.00%

800.00%
5-year Treasury note 

0.604%

0.614%

-4.13%

-27.23%
10-year Treasury note

1.623%

1.615%

-0.86%

-13.25%
30-year Treasury bond

3.032%

3.032%

0.00%

4.95%
Currencies











U.S. Dollar Index

80.064

79.830

0.05%

-0.57%
British pound

1.6103

1.6137

-0.35%

3.64%
(in U.S. $)

 








U.S. $ in pounds

£0.621

£0.620

0.36%

-3.51%
Euro in dollars

$1.29

$1.29

0.52%

-0.28%
(in U.S. $)

 








U.S. $ in euros

€ 0.774

€ 0.774

-0.51%

0.29%
U.S. $ in yen 

78.62

78.18

0.83%

1.97%
U.S. $ in Chinese

6.35

6.32

1.03%

0.31%
yuan











Canada dollar

$1.014

$1.017

-0.29%

3.33%
(in U.S. $)

 








U.S. dollar 

$0.987

$0.984

0.37%

-3.23%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,779.80

$1,775.60

0.33%

13.59%
(per troy ounce)

 








Copper (-HG)

$3.784

$3.801

0.69%

10.13%
(per pound)

 








Silver (-SI)

$34.6900

$34.6690

0.33%

24.27%
(per troy ounce)

 








Wheat (-ZW)

$8.7300

$8.7150

-3.27%

33.74%
(per bushel)

 








Corn (-ZC)

$7.5675

$7.583

0.07%

17.05%
(per bushel)

 








Cotton 

$0.7216

0.7185

2.14%

-21.29%
(per pound)

 








Coffee

$1.8105

1.8365

4.35%

-21.16%
(per pound)

 








Crude oil (-CL)

$88.14

$91.89

-4.39%

-10.82%
(per barrel)










 

476Comments
Oct 3, 2012 2:28PM
avatar
What's the over under on how many times Obama says; "Look"

or

"We've turned the corner"
Oct 3, 2012 1:45PM
avatar

You have to love these headlines for the last year and a half or more. Six or so headlines recycled over and over and over again, hour after hour, day after day,  week after week, month after month, and now it looks like year after year. All meaning nothing, but more corruption, manipulation and lies from our criminal leaders, government, bankers and wall street.

It's time for the American people to wake up and fire all of these worthless parasites in November...

Oct 3, 2012 1:45PM
avatar

"The U.S. government tacked on an additional $1.3 trillion to the national debt in the fiscal year that ended over the weekend, increasing the average liability for an American household by nearly $11,000.  The fiscal year 2012 figure marks the fourth straight year with a deficit of more than $1 trillion, starting before President Obama took office, and it pushes the total debt to $16 trillion. The debt increase in fiscal 2012 was slightly larger than the increase in fiscal 2011."


We can't afford 4 more years of Obama occupying the White House.
Oct 3, 2012 2:32PM
avatar
Just an ordinary teacher said;
"I am voting for President Obama and American recovery.  Thank you President Obama for never giving up on "we the people"  and for not putting "we the corporations" first."  

You don't have the common sense to know you're country is being thrown to the wolves.
And that mindset is why you're not "An Extraordinary Teacher."
Oct 3, 2012 2:29PM
avatar
Most pissed off people in America have to Be Al "The Bore" Gore and John "the catsup queen" Kerry. 

They must be fuming over the fact that this media protects Obama at all cost but wouldn't give them jack squat. 
Oct 3, 2012 1:54PM
avatar
We're going to get a few hundred thousand XMAS time jobs right now. Most of the retailers are doing the 20 hours per head per week thing.


Oct 3, 2012 2:42PM
avatar
Enbeaver said;
"What does Mitt Romney have in common with a PC?  Don't answer.  At least we know that a PC reset button works.

Yes we do know a reset button WORKS, and that's more than we can say for Obama, unless you count fund raising........

Oct 3, 2012 2:49PM
avatar
I'm tired and frustrated. Probably because I've been "Buried for the last four years."

Don't believe me??

Just ask

Joe ( Just when you thought I couldn't get my foot any farther down my throat ) Biden!
Oct 3, 2012 3:32PM
avatar
Yeah, it was kinda funny to have Obama tell the Israeli Prime minister he was way to busy to meet with him.   I tell my wife stuff like that when I am going golfing too...  


We need a President that is not too busy golfing, to meet with a loyal ally, when they request a face to face meeting.  I suppose it is just part of Obama's arrogant, lazy, corrupt attitude.   The man is stupid beyond belief.  Maybe with all this golf he can be a pro after he leaves office...
Oct 3, 2012 2:37PM
avatar
"Consensus is that President Obama is a "Master-Debater." He Master-Debates on 
television, Master-Debates on the radio, and often Master-Debates in the oval office 
as well as in front of Michelle and even the kids."

And next month, when he's voted out, he can go work on a charter boat as a "Master Baiter."
Oct 3, 2012 3:23PM
avatar

TWIT says - When I was in the Military it was common practice at the end of the fiscal year to spend any money left in the budget so the budget would not be cut the next year......

 

This is SOP for every government entity not just the military. Your hard earned tax dollars at work. It is changing somewhat at the state level because the federal cancer is eating away at the whole body.

Oct 3, 2012 2:25PM
avatar
Market surges $3.00 on made up news...
Oct 3, 2012 1:47PM
avatar
Speaking of morons, anyone see Arnold making the rounds selling his book...

Oct 3, 2012 3:50PM
avatar

TOG says - Attrition is just a fancy word for retiring, UNLESS they don't fill the jobs.

 

No actually attrition is a word that means the elimination of a position at a company through a person retiring.......... usually a pushed out (or bought out) not ready to really retire person. JMO

Oct 3, 2012 3:22PM
avatar
Obama is 46-47in the polls +/- 5% that is mediocre and disappointing. that's not good numbers, even if he wins the election with that kind of support his second term will be dismal its apparent that he lacks support from half the country seems we had this scenario with bush jr and you know how that turned out. if obama is a keeper he would appeal to at least 65% of voters especially after having the job in question for 4 years.
vote him out if these numbers don't improve we deserve better than that.
Oct 3, 2012 1:52PM
avatar
I GUESS WE HAVE TO GO TO UNIVISION TO GET THE TRUTH NOW 


"We may never know how many deaths, kidnappings and other criminal activities were facilitated by more than 2,000 weapons that were allowed to 'walk' into Mexico under the Obama administration's Fast and Furious program, but a Univision special aired Sunday exposes more of the carnage. The special, put together by Univision's investigative unit and aired as a special edition of Univision's 'Aqui y Ahora' ('Here and Now') identified massacres committed using guns from the ATF operation.... In addition to fueling increased gun violence in Mexico, guns from Fast and Furious previously unreported by congressional investigators found their way into the hands of drug traffickers across Latin America in countries such as Honduras and Colombia, as well as the U.S. Commonwealth of Puerto Rico. Kudos to Univision, which regrettably will not have a reporter at Wednesday's presidential debate to ask the tough questions the administration's media sycophants will not, for pursuing the truth on Fast and Furious with more vigor than most American media outlets. ... Univision found 57 Fast and Furious weapons in addition to 122 specifically mentioned in a congressional report. They included weapons used in the massacre at a party just one year after President Obama's inauguration and less than a year before Border Patrol Agent Brian Terry was killed in December 2010 at the hands of an illegal immigrant working for the Sinaloa Cartel just 10 miles from the Mexican border near Nogales, Ariz. ... The report also reveals the botched operation may have played a role in a 2009 massacre, where 18 young men were killed at a rehabilitation center also in Juarez. The massacre was reportedly ordered and carried out by Mexican hit men. Current estimates put the number of Mexican nationals murdered by Fast and Furious weapons at 300. More such evidence will be found and the Fast and Furious body count will rise, ignored by the administration and its media protectors." 
Oct 3, 2012 2:25PM
avatar
Pete said;
"private sector has added jobs for the last 36 months including this month
where do you get your info....fox news????
LOL"

Pete, haven't learned a thing, have you?
Added Private Sector Jobs? LMMFAO!!! Ya, how many? About 18,000 a month when it takes 100,000 just to keep up with population growth! Most of those are infrastructure jobs that are tax funded at that!
You should really do yourself a favor and stop writing and just stick to reading.....
Oct 3, 2012 2:00PM
avatar

Andrea Mitchelle in charge of fact checking

Ethiopia in charge of food distribution
Oct 3, 2012 2:23PM
avatar
What's the over and under for Obama using the fair share line in the debate tonight.My guess is about 100 times.
Oct 3, 2012 4:08PM
avatar
Obama is taking credit for making it easier for college students to get a loan by taking the middle man, the banks, out of the equation. Now the tax payer is stuck with all of the risk on these loans that are defaulting in record numbers. As Re Tog pointed out these loan moneys are being spent on education in the wrong fields of growth. I would like to know what fields are growing so rapidly as to employ all the graduates so they can start paying back those loans. Maybe they can go for automotive assembly technology and build the new Cadillac's in China next year. I heard they can live in the worker dorms and bring their mini fridge from college.
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