Wall Street loses ground as HP plummets 9.6%

Dow Jones: 12,106.72 (–106.07) S&P 500: 1,307.77 (–7.67) Nasdaq: 2,722.99 (–33.43)US STOCKS fell, dragging benchmark indexes to the biggest two-day drop in six months, as oil surged to $100 a barrel amid growing tensions in the Middle East and Hewlett-Packard's forecasts trailed analysts' estimates.

“People are always looking forward and that’s why they are reacting negatively to the spike in oil prices,” Michael Holland, who oversees more than $4 billion as chairman of Holland and Co in New York.

“Higher crude prices may challenge the outlook for economic growth. So, even as we have better than estimated earnings and economic figures in the US, those are sort of looking at the rear-view mirror,” he said.

Crude oil prices touched $100 a barrel in New York for the first time since October 2008 as Libya’s uprising threatened to disrupt crude exports.

Oil prices may surge to $220 a barrel if political unrest in North Africa halts exports from Libya and Algeria, Nomura Holdings said.

The Organization of Petroleum Exporting Countries has spare production capacity of about 5 million barrels a day, according to the International Energy Agency.

Hewlett-Packard tumbled 9.6 per cent to $43.61. Excluding some costs, profit will be $1.21 a share at most in the second quarter, HP said yesterday. Sales will be as much as $31.6 billion. That compares with the average analyst predictions of $1.26 in per-share profit and $32.6 billion in revenue.

Ford declined 2.4 per cent to $14.86. The automaker said it is recalling 144,000 F-150 pickup trucks in the US and Canada because front air bags may deploy when not needed.

Lowe’s dropped 1 per cent to $25.72. The home-improvement retailer forecast first-quarter earnings excluding some items of as little as 34 cents a share.

United Continental Holdings sank 6.8 per cent to $22.78, while FedEx declined 4.3 per cent to $89.25.

Bigger rival Home Depot slumped 2.1 per cent to $37.30.

Energy shares had the biggest gain in the SP 500 among 10 industries. Chevron, the second-largest US energy company, rallied 1.9 per cent, the most in the Dow average, to $102.27.

Exxon Mobil gained 1.9 per cent to $87.07. – (Bloomberg)