NEW YORK (AP) — A warning from the Federal Reserve chairman about the "fiscal cliff" helped push stocks lower Tuesday.
In a speech to the Economic Club of New York, Chairman Ben Bernanke urged Congress to take action to avoid the steep federal spending cuts and tax increases scheduled to take effect Jan. 1.
Asked in a Q&A session whether the Fed could limit the economic hit posed by the budget-tightening measures, Bernanke said: "If the economy goes off the broad fiscal cliff, I don't think the Fed has the tools to offset that."
The stock market was already slightly lower. The Dow Jones industrial average sank to a loss of 94 points shortly after Bernanke spoke. By late afternoon, it was down 34 points at 12,760.
Energy companies slumped along with the price of oil, and a surprise announcement from Hewlett-Packard weighed on tech stocks.
HP's executives said that a company HP bought for $10 billion last year lied about its finances. CEO Meg Whitman said that there were "serious accounting improprieties, 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 5 points to 1,382. The Nasdaq composite index, heavy with technology companies, fell 12 points to 2,904.
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.