By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks slipped Tuesday after a two-session surge as Federal Reserve Chairman Ben Bernanke urged lawmakers to make a deal and end uncertainty over the "fiscal cliff."

In a speech Tuesday afternoon in New York, Bernanke said Washington needs to resolve the uncertainty over U.S. tax and spending policy weighing on consumers, businesses and markets.

The Fed chief's reiteration of the threat and his repeating his assertion that the central bank does not have the tools to offset the economic harm the cliff represents is a "reminder once again that yesterday was a hope trade, and we're taking some of the hope trade off today," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The Dow Jones Industrial Average (DJI) fell 63.52 points, or 0.5%, to 12,732.44, with Hewlett-Packard (HPQ) pacing losses among 21 of its 30 components.

H-P's shares skidded 12% after the Dow component reported fourth-quarter revenue below expectations and earnings above estimates, but only after excluding a large accounting charge tied to alleged fraud by an acquired company.

The S&P 500 index (SPX) lost 5.79 points, or 0.4%, to 1,381.10, with technology the poorest performer and health care faring the best among its 10 industry groups.

The Nasdaq Composite (RIXF) declined 14.30 points, or 0.5%, to 2,901.77.

For every three shares on the rise four slid on the New York Stock Exchange, where 343 million shares traded by 1:50 p.m. Eastern. Composite volume topped 2 billion.

Oversold on hope?

"We had a big rally yesterday; that may have been the result of an oversold condition," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co.

"I'm a little concerned about yesterday -- we had a lot of optimism all of a sudden based on some discussion that the fiscal cliff could be resolved before year end. And the consensus seems to be that what is going on in the Middle East is not all that troubling, as well," Bittles said.

On Tuesday, Egypt's president reportedly said a week of fighting between Israel and Palestinian groups in the Gaza Strip would come to a halt later in the day. The comments came as Secretary of State Hillary Clinton headed to the Middle East to take part in truce talks.

Crude-oil futures slumped $2.57 to $86.71 a barrel.

Best Buy Co. (BBY) fell after the consumer-electronics retailer reported a $10 million loss for the third quarter on weaker-than-expected sales at its established stores.

Ahead of Wall Street's open, stock-index futures held near neutral after the Commerce Department said construction of new homes unexpectedly rose to the highest in more than four years in October. Economists polled by MarketWatch had anticipated a decline, due in part to superstorm Sandy.

"The housing industry is getting better to the benefit of the balance sheets of the American consumer and banking system," emailed Peter Boockvar, equity strategist at Miller Tabak & Co. "Housing has bottomed, but I still think it's important to keep the recent improvement in perspective so as not to get carried away as the recovery, I believe, will still be in fits and starts."

A day after Moody's Investors Service lowered France's top credit ranking, European finance ministers are meeting in an effort to shore up Greece's finances.

Stocks on Monday rallied for a second session on optimism that President Barack Obama and congressional leaders would reach agreement on averting the tax hikes and spending cuts otherwise known as the fiscal cliff.

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