Stocks open lower; HP takes a big hit

Stocks fall at open; big hit for HP after saying acquired company lied about finances

Joseph Mastrolia, left, a trader with Barclays, and Chris Casaliggi, Euronext floor manager, begin early trading on the floor of the New York Stock Exchange.
Joseph Mastrolia, left, a trader with Barclays, and Chris Casaliggi, Euronext floor manager, begin early trading on the floor of the New York Stock Exchange.

NEW YORK — Stocks were mostly flat today on Wall Street. Hewlett-Packard stock suffered a big decline after its executives said that a company HP bought for $10 billion last year lied about its finances.

The Dow Jones industrial average was down 18 points to 12,778 three hours into trading. Other major indexes were close to break-even. HP, one of the 30 stocks that make up the Dow, declined $1.47, or 11 percent, to $11.83.

Hewlett-Packard CEO Meg Whitman said that there were “serious accounting improprities, disclosure failures and outright misrepresentations” at the company, Autonomy, which makes search engines. She stopped short of alleging fraud.

HP took an $8.8 billion charge in its latest quarter to bring the accounting value of Autonomy in line with its real value.

In the broader stock market, the Standard & Poor's 500 index lost a fraction of a point to 1,386. The Nasdaq composite index, heavy with technology companies, fell three points to 2,913.

Energy stocks and the price of crude oil fell after the president of Egypt predicted that Israel's weeklong offensive in the Gaza Strip would end in hours and the Israeli prime minister said Israel would be a “willing partner” to a cease-fire.

Crude oil was down $2.92, more than 3 percent, to $86.36 per barrel. It traded above $89 earlier in the day. Energy stocks in the S&P declined 0.7 percent as a group, making them the worst performers.

Homebuilder stocks were among the best. The government said that U.S. builders started construction last month on the most homes and apartments since July, 2008.

PulteGroup rose 4.3 percent, Lennar 3.7 percent and D.R. Horton 2.5 percent.

On Monday, the Dow soared 207 points. Investors focused on signs over the weekend that congressional Republicans and the White House might be able to reach a deal on tax increases and government spending cuts set to take effect Jan. 1.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note rose 0.01 percentage point to 1.63 percent.

Among stocks making headlines:

— Hormel Foods dropped $1.40, or 4.5 percent, to $29.90 after its earnings and revenue fell below Wall Street expectations. The company said sales of Spam remained strong, and it increased its annual dividend 13 percent, to 68 cents per share.

— Best Buy fell $1.62, or 12 percent, to $12.13, its lowest in more than a decade. The company, which has struggled for years against increased competition from online electronics retailers, turned in another dismal earnings report.

— Krispy Kreme Doughnuts climbed $1.64, or 22 percent, to $9.18 after it forecast earnings for 2013 above what Wall Street was expecting.

— Green Mountain Coffee rose $1.68, or 6.1 percent, to $29.01 after picking a new CEO, Brian Kelley of Coca-Cola.

— Groupon gained 31 cents, or 10 percent, to $3.42 after a hedge fund, Tiger Global, said it had bought a 10 percent stake in the company.