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Stocks slide despite H-P CEO’s ouster

/ Source: The Associated Press

Stocks sagged Wednesday in a bout of profit-taking, but blue chips fared better than they might have as shares of Dow component Hewlett-Packard Co. surged following the ouster of CEO Carly Fiorina.

The robust performance of H-P shares gave the Dow Jones industrial average a bit of a lift, but it was not enough to keep the index in positive territory. Oil prices were volatile as government inventory data showed lower-than-expected fuel supplies, and Treasuries rallied. Analysts were not overly alarmed by the day’s trading, however, saying some pullback in stocks was to be expected following the market’s advance last week.

“Oil is definitely factoring in ... but let’s also take into account that the market has seen a nice little snap back during February after what can only be described as a dismal January,” said Bryan Piskorowski, market analyst at Wachovia Securities. “To a certain extent, the market is using the oil figures as a reason to do some profit taking, and the dollar is lower, so that’s rolled together to pare some recent gains.”

The Dow fell 60.52, or 0.56 percent, to 10,664.11.

The broader gauges were also lower. The Standard & Poor’s 500 index declined 10.31, or 0.86 percent, to 1,191.99. The Nasdaq composite index skidded 34.13, or 1.64 percent, at 2,052.55.

Oil prices rebounded briefly after the government’s weekly inventory figures showed a surprising 1 million barrel drop in crude inventories; analysts had expected a build of 730,000 barrels. Stores of distillate fuels, which include heating oil, also declined more steeply than expected. By afternoon, the rally fizzled, however. Crude futures settled up 6 cents at $45.46 a barrel on the New York Mercantile Exchange, after trading as low as $44.60 a barrel and as high as $46.40. Meanwhile, the U.S. dollar fell against other major currencies.

A run-up in Treasuries may also have worked against stocks, analysts said, noting that the yield on the 10-year note had slipped below 4 percent for the first time in more than three months, to 3.98 percent. Some of the buying was linked to the government’s auction of $15 billion in five-year notes, but bonds had already been moving higher, perhaps due to Atlanta Federal Reserve President Jack Guynn’s suggestion in an interview with The Wall Street Journal that the group might need to change its policy statement as it adjusts the pace of interest rate hikes.

“Why are we seeing strength in bonds here? It could be the bond market is anticipating a period of slower economic growth going forward, which could mean earnings estimates may be too optimistic, and need to be adjusted lower,” said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore. “It just raises more questions. It raises more uncertainty. It’s not what you would expect, with the Fed raising interest rates. I think that disconnect is troubling to some stock investors.”

Hewlett-Packard soared 6.9 percent, or $1.39, to $21.53, after the abrupt departure of Fiorina, who cited differences with the board over strategy as she tried to transform the company from a printer business to a broad-based technology giant. The board named chief financial officer Robert P. Wayman as interim CEO.

Cisco Systems Inc. slipped 61 cents to $17.63; quarterly profits at the networking company, announced after the bell Tuesday, matched expectations, but sales fell short and investors seemed less than impressed with a cautious outlook for the current quarter.

Insurance giant American International Group added $1.58 to $69.31 on an 11.5 percent rise in earnings as premium growth offset heavy storm losses and a settlement with federal regulators. Results were above analysts’ projections, and profits for the full year set a record, AIG said.

CIGNA Corp. was up $1.43 at $85.35 as profits beat expectations, largely on strong performance in its health care segment and a gain from the sale of its retirement benefits business.

Advanced Micro Devices gained 30 cents to $17.94 after Morgan Stanley raised its rating on the chipmaker to “overweight” and set a 12-month price target of $25 on the stock. The brokerage said it expects AMD to cut or reduce its exposure to the low-margin flash memory business, and to gain market share.

Decliners outnumbered advancing issues by about 2 to 1 on the New York Stock Exchange. Volume came to 1.51 billion shares traded, compared to 1.42 billion on Tuesday.

The Russell 2000 index, which tracks smaller company stocks, was down 13.01, or 2.04 percent, at 625.71.

Overseas, Japan’s Nikkei stock average slipped 0.15 percent. In Europe, France’s CAC-40 slid 0.28 percent, Britain’s FTSE 100 fell 0.10 percent and Germany’s DAX index declined 0.42 percent.