US stocks closed near breakeven Tuesday, clawing back from losses after Dow member Hewlett-Packard's huge charge for a soured acquisition and disappointing results rattled sentiment.
The Dow Jones Industrial Average shed 7.45 points (0.06 percent) at 12,788.51.
The S&P 500-stock index ticked up 0.93 (0.07 percent) to 1,387.82, while the tech-rich Nasdaq Composite added 0.61 (0.02 percent) at 2,916.68.
Markets had bounced about two percent higher Monday, but the momentum quickly faded.
The Dow "spent time on both sides of breakeven today, as Wall Street weighed another round of upbeat housing data against ugly earnings and global economic concerns," said Andrea Kramer at Schaeffer's Investment Research.
Computer giant HP plunged 12 percent to $11.71 after announcing an $8.8 billion charge related to alleged accounting improprieties at Autonomy Corp, which HP acquired in August 2011 for over $10 billion.
The company posted a $6.9 billion fiscal fourth-quarter loss and disappointing sales, and warned on the current quarter.
The Commerce Department issued a better-than-expected report on housing starts which hit a four-year high for the second straight month in October.
Moody's credit downgrade of France, taking away its coveted triple-A rating, also undermined sentiment, analysts said.
The downgrade "is a reminder that the eurozone debt crisis has cut to the core of the eurozone," said Patrick O'Hare at Briefing.com.
Stocks, which had opened in the red, fell even more in midday trade as Federal Reserve Chairman Ben Bernanke gave a speech at the Economic Club of New York.
"The chairman was clear in saying the Fed was largely powerless to offset the full impact of the fiscal cliff on the US economy," Barclays analyst Michael Gapen said.
Intel was the second-worst Dow performer, down 3.6 percent in the wake of its announcement Monday that chief executive Paul Otellini would retire in May and a search was under way for his replacement.
Bank of America led the blue chip gainers, up 1.5 percent.
Electronics retailer Best Buy plunged 13 percent after its quarterly earnings missed estimates.
Rupert Murdoch's media conglomerate News Corp. edged up 0.2 percent after unveiling a deal to buy a 49 percent stake in the Yankees Entertainment and Sports Network, which broadcasts baseball and other sports.
Bond prices fell. The 10-year US Treasury yield rose to 1.66 percent from 1.61 percent late Monday, while the 30-year increased to 2.81 percent from 2.76 percent.
Bond prices and yields move inversely.