U.S. stocks down after the open; HP plunges 12%

Investing.com - U.S. stock markets were lower after the open on Tuesday, pausing after the previous day’s rally as investors digested a number of key corporate earnings reports.

During early U.S. trade, the Dow Jones Industrial Average fell 0.45%, the S&P 500 index shed 0.4%, while the Nasdaq Composite index declined 0.35%.

U.S. markets rallied on Monday as sentiment was boosted after U.S. Congressional leaders said talks with President Barack Obama to avert the fiscal cliff, a combination of automatic tax increases and spending cuts due to come into effect on January 1, were "constructive."

There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the six weeks left before the January 1 deadline.

But sentiment took a hit Tuesday after ratings agency Moody’s downgraded France’s AAA-rating by one notch to AA1 and kept a negative outlook on the rating, citing weakening growth prospects for the euro zone’s second-largest economy.

The downgrade followed a similar move by Standard & Poor’s several months ago, leaving Fitch Ratings as the only ratings firm to keep France at triple-A.

Investors now looked ahead to of a meeting of euro zone finance ministers later in the day in Brussels to discuss whether Greece can receive its next installment of bailout funds.

In earnings news, shares in Hewlett Packard tanked 12.3% to the lowest level since 1994 after the company reported an USD8.8 billion asset impairment charge related to its acquisition of Autonomy Corporation. HP bought Autonomy in 2011 for about USD10 billion.

The PC giant also said fourth quarter revenue totaled USD29.96 billion, below expectations for sales of USD30.5 billion.

Troubled electronics retailer Best Buy saw shares tumble 9.3% after announcing lower-than-expected third quarter earnings.

On the upside, Krispy Kreme Doughnuts saw shares surge 11% after reporting a 6.9% increase in third quarter earnings from the same period a year earlier. The strong results prompted the company to raise its full-year earnings outlook.

Meanwhile, Green Mountain Coffee Roasters shares rallied 8.8% after the company named former Coca Cola executive Brian Kelley as president, chief executive officer, and board member effective December 3.

Official data released earlier showed that U.S. housing starts rose 3.6% in October to a seasonally adjusted annual rate of 0.894 million, confounding expectations for a 3.7% decline to 0.840 million.

Housing starts for September were revised down to 0.863 million units from a previously reported 0.872 million units.

However, the number of building permits issued in October fell 2.7% to a seasonally adjusted 0.866 million, compared to expectations for a decline to 0.865 million.

Building permits issued in September totaled 0.890 million units.

Across the Atlantic, European stock markets were mixed, as investors looked ahead to a meeting of euro zone finance ministers to discuss a delayed bailout payment for Greece.

The EURO STOXX 50 eased down 0.1%, France’s CAC 40 was little changed, Germany's DAX added 0.2%, while Britain's FTSE 100 declined 0.2%.

During the Asian trading session, Hong Kong's Hang Seng Index slumped 0.25%, while Japan’s Nikkei 225 Index eased down 0.1%.

Markets in Japan turning lower after the Bank of Japan refrained from announcing fresh easing measures at the conclusion of its November policy meeting earlier in the day.