Hewlett-Packard losses drives Wall Street lower

Dow Jones: 10,817.65 (–172.93) Nasdaq: 2,341.84 (–38.59) SP 500: 1,123.53 (–17.12):US STOCKS fell yesterday, extending the fourth straight weekly slump for the Standard and Poor's 500 Index, as the cheapest price-earnings ratios since 2009 failed to lure investors amid concern the global economy is weakening.

Technology and financial companies in the SP 500 had most losses among 10 groups, falling 2.8 per cent and 1.9 per cent.

Hewlett-Packard tumbled 20 per cent, the most since 1987, after issuing forecasts that missed analysts’ estimates and announcing strategic shifts that undermined confidence in the company’s management.

Citigroup and JPMorgan fell more than 2.3 per cent as a gauge of European banks sank to the lowest level since 2009.

The SP 500 lost 4.7 per cent this week and 16 per cent since July 22nd as more than $2.7 trillion in value was erased from US equities.

The Dow Jones Industrial Average slumped yesterday with Hewlett-Packard dragging it down by more than 44 points.

“The market is in dire need of confidence,” Burt White, who helps oversee $330 billion as chief investment officer at LPL Financial in Boston, said.

“It’s looking for policy makers to give confidence. The market is grasping for any possible signs of good news. Cheap isn’t cheap enough when you have a confidence problem,” Mr White said.

The SP 500 has fallen 18 per cent from an almost three-year high on April 29th amid concern about Europe’s debt crisis and a global economic slowdown.

The decline through August drove the index to a valuation of 12.2 times reported earnings, the lowest level since March 2009.

Global stocks fell yesterday, extending this week’s slump in the MSCI All-Country World Index to 4 per cent, after some of the world’s biggest banks cut their forecasts for growth.

JPMorgan Chase said the US economy may expand less than previously projected in the next two quarters as consumer sentiment drops and the housing market fails to gain momentum.

Earlier this week, Morgan Stanley cut its forecast for global growth in 2011, and Citigroup lowered estimates for the US. – (Bloomberg)