Hewlett-Packard slides after cutting forecast

Dow Jones:12,479.58 (-68.79) S&P 500: 1,328.98 (-0.49) Nasdaq: 2,783.21 (+0.90): THE DOW and the SP 500 fell for a third day yesterday after disappointing figures from Wal-Mart and Hewlett-Packard (HP), although a late rebound suggested investors may be looking for a short-term bounce.

The S&P 500 and Nasdaq dipped below their 50-day moving averages, but those levels appeared to spark buying interest.

Recent weakness in sectors tied to economic growth and the sharp decline in commodities have spurred talk of a prolonged pullback. Short-term traders see an opportunity, judging by late gains in certain energy names and financials’ strong performance.

The cyclical stocks are “easy to buy out there. We’re not having any trouble buying them for clients,” said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland. “There will be a tradable bounce, but it still feels like they are under distribution,” he said, using traders’ parlance for selling.

Lately investor concern has centred around lacklustre economic figures. Wal-Mart, the nation’s largest retailer, said same-store sales have now fallen for two years. Wal-Mart’s stock fell 0.9 per cent to $55.54.

HP, the world’s largest technology company, tumbled 7.3 per cent to $36.91 after cutting its forecast due to problems stemming from Japan’s earthquake and soft PC sales.

Housing data and industrial production slowed, adding to evidence that the economy is hitting a soft patch. Action was volatile as stocks fluctuated with currency and commodity prices.

Tech stocks fell as investors sold recent winners due to unease about weakness in the economy.

Some analysts have pointed to oversold conditions in the stock market’s cyclical areas such as energy, materials and industrials, which they say are primed for a short-term bounce.

Caution dominated much of the day’s trading with the S&P’s industrial sector index down 1.3 per cent, pressured by Dow component Caterpillar, which fell 3.8 per cent to $102.08.

Forest product company and homebuilder Weyerhaeuser lost 2.9 per cent to $21.50.

The S&P utilities sector index rose 0.7 percent, boosted by a 3 per cent gain in the shares of American Electric Power to $38.85. – ( Reuters)