* Bernanke: Fed lacks tools to offset "fiscal cliff"
* Moody's cuts France credit rating
* Hewlett-Packard shares hit 10-year low after charge
* Dow off 0.2 pct, S&P 500 off 0.1 pct, Nasdaq off 0.2 pct
By Angela Moon
NEW YORK, Nov 20 (Reuters) - U.S. stocks fell on Tuesday
following a two-day rally, after Federal Reserve Chairman Ben
Bernanke said the central bank lacks tools to cushion the U.S.
economy from the impact of the "fiscal cliff."
Bernanke, in comments before the Economic Club of New York,
said the Fed does not have the tools to offset the damage that
would result if politicians fail to strike a deal to prevent
going off the fiscal cliff. If a solution isn't approved in
time, then mandatory tax increases and spending cuts will go
into effect early next year.
Bernanke also said he does not believe the possible benefits
of cutting the interest it pays on bank reserves are sufficient
to outweigh the risk of trouble in money markets.
"This is a more realistic and pragmatic picture of where we
are, compared to what we've been hearing for the past couple of
days from politicians that are mostly PR stunts," said James
Dailey, portfolio manager at TEAM Asset Strategy Fund in
Stocks had rallied for the last two sessions on optimism
that Washington politicians could agree on a deal to avoid the
U.S. fiscal cliff. But the gains followed two weeks of sharp
The Dow Jones industrial average was down 22.73
points, or 0.18 percent, at 12,773.23. The Standard & Poor's 500
Index was down 1.38 points, or 0.10 percent, at 1,385.51.
The Nasdaq Composite Index was down 6.49 points, or 0.22
percent, at 2,909.58.
Hewlett-Packard Co shares sank 11.9 percent to a
10-year low at $11.72 as the computer and printer maker swung to
a fourth-quarter loss. The company said it took an $8.8 billion
charge in the quarter, with $5 billion related to its
acquisition of software firm Autonomy, citing "serious
Best Buy Co shares fell 12.7 percent to $12 after
the consumer electronics retailer reported a net loss of $13
million for the third quarter on weaker-than-expected sales at
its established stores.
Another factor weighing on stocks was Moody's Investors
Service's reduction of France's sovereign rating by one notch to
Aa1 after the market's close on Monday. Moody's cited an
uncertain fiscal outlook as a result of the weakening economy.
"This brings forward a whole new set of problems to the euro
-zone issue. When the lifeguards, in this case, Germany and
France, are in trouble, when they need to save people like
Greece and Spain, that could be a big concern," Dailey said.