Stocks edge lower, rebounding from Cyprus losses
NEW YORK (AP) — Stocks were little changed on Wall Street after recouping losses from an early sell-off caused by concern that a bailout plan for the Mediterranean island nation Cyprus would re-ignite the European debt crisis.
The Dow was down 23 points, or 0.2 percent, to 14,502 as of 1:42 p.m. The index fell as much as 110 points in early trading, before winning back much of the decline.
The Standard & Poor's 500 index fell five points, or 0.3 percent, to 1,555. The Nasdaq composite dropped six points, or 0.1 percent, to 3,245.
European markets closed with modest losses, recovering from an early swoon. The euro fell to a three-month low against the dollar.
Concerns persist about the euro-region's lingering debt crisis, despite a strong rally in stocks since the start of the year that pushed the Dow to record highs. The index fell 1.6 percent Feb. 25, its biggest wobble this year, after elections in Italy threw the country into political paralysis, endangering crucial economic reforms.
"Europe has got problems," said Uri Landesman, president of Platinum Partners, a hedge fund. "You could get more stuff like this and the market isn't priced to handle that."
A weekend agreement between Cyprus and its European partners called for the government to raid bank accounts as part of a €15.8 billion ($20.4 billion) financial bailout, the first time in the euro zone crisis that the prospect of seizing individuals' savings has been raised.
The proposal roiled international markets and the measures are stoking fears of bank runs in the other 16 nations that use the euro.
Markets in Europe and Asia also fell during early trading, before retracing some of their losses later in the day. Germany's DAX index dropped 0.4 percent and Spain's main index of stocks shed 1.3 percent. Indexes in Britain and France each lost 0.5 percent, recovering from steeper declines early in the day.
The dollar rose almost a penny against the euro, pushing the European currency to its lowest in three months against the U.S. currency. Gold climbed $12 to $1,604.50 an ounce. The yield on the 10-year Treasury bond, which moves inversely to its price, dropped to 1.99 percent to 1.96 percent.
The stock market's rebound suggests that traders consider the Cyprus situation to be contained for now, said Quincy Krosby, a market strategist for Prudential. The threat of rising volatility may also deter the Fed from thinking about ending its economic stimulus program. The central bank starts its second two-day policy meeting of the year Tuesday.
"Absent of the Cyprus flare-up, the markets were slowing a bit and it looked as if investors were digesting the gains and waiting for the next catalyst," said Krosby.
Financial stocks were the biggest decliners in the S&P 500. Investment bank Morgan Stanley fell 48 cents, or 2 percent, to $23.11. Citigroup dropped $1.03 to $46.23.
Goldman Sachs said Monday that it had lifted its end-of-year target for the S&P 500 to 1,625 from its previous target of 1,575. The investment bank is forecasting that the U.S. economy will grow 2 percent this year and 2.9 percent next year. It also predicts that corporate deals and dividend payments will increase.
Homebuilders fell Monday after a report showed that confidence among U.S. homebuilders dropped this month because of concerns that limited land, building materials and labor will slow sales. The National Association of Home Builders/Wells Fargo builder sentiment index fell to 44 from 46 in February, with measures of customer traffic and current sales conditions both declining from February.
D.R. Horton dropped 28 cents to $24.05, cutting this year's gain to 22 percent. Ryland Group fell 87 cents to $40.13, paring this year's advance to 10 percent.
Among other stocks making big moves:
— Schlumberger dropped $2.47 to $76.93 after the oilfield services company said that its first quarter activity was below its expectations as customers reactivated fewer rigs than forecast.
— Boeing fell $1.15 to $85.27 after archrival Airbus signed its biggest deal of all time on Monday. The European plane maker won an order from Indonesia's Lion Air worth 18.4 billion euros ($24 billion) for its short haul A320 and A321 jets.