Wall Street Ends Lower on Renewed Cyprus Worries
Mar 25th 2013 5:00PM
Updated Mar 25th 2013 11:55PM
By Angela Moon
NEW YORK, March 25 (Reuters) - U.S. stocks fell on Monday on renewed concerns about the developments in Cyprus and the euro zone, which wiped away earlier gains that drove the S&P 500 index to less than a point away from its record close.
Stocks fell after Jeroen Dijsselbloem, who heads the Eurogroup of euro-zone finance ministers, told Reuters and the Financial Times that when failing banks need rescuing, euro-zone officials would turn to the bank's shareholders, bondholders and uninsured depositors to contribute to their recapitalization.
He also said that Cyprus was a template for handling the region's other debt-strapped countries.
But stocks came off their lows after Dijsselbloem clarified his previous comments and said, "Cyprus is a specific case with exceptional challenges, which required the bail-in measures we have agreed upon yesterday. Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used."
Before his remarks, the Dow industrials hit yet another record intraday high and the S&P 500 edged closer to its highest closing level ever on Monday after negotiators reached a deal to keep Cyprus afloat with a financial bailout and avert the country's possible exit from the euro zone.
"There was certainly a sigh of relief that a deal was reached, but there are still growing concerns that more work needs to be done," said Jack Ablin, the chief investment officer of BMO Private Bank in Chicago.
Banking shares were among the day's top decliners. Shares of Morgan Stanley (MS) fell 1 percent to $21.97 while Bank of America (BAC) dropped 1.3 percent to $12.40.
The Dow Jones industrial average (^DJI) slipped 64.28 points, or 0.44 percent, to end at 14,447.75. The Standard & Poor's 500 Index (^GSPC) dipped 5.20 points, or 0.33 percent, to 1,551.69. The Nasdaq Composite Index (COMPX) declined 9.70 points, or 0.30 percent, to close at 3,235.30.
Earlier, the Dow climbed to an intraday record high of 14,563.75. The S&P 500 rose to a session high of 1,564.91 - just a fraction of a point below its record closing high of 1,565.15 set on Oct. 9, 2007.
The CBOE Volatility Index, known as the VIX, Wall Street's favorite barometer of investor anxiety, ended up 1.3 percent at 13.74, off its intraday high of 14.61.
In company news, Dell Inc (DELL) said it received alternative proposals from Blackstone and billionaire investorCarl Icahn that could be superior to the $24.4 billion offer from founder Michael Dell and private equity fund Silver Lake Partners last month. Dell shares rose 2.6 percent to $14.51.
Merger and acquisition activity has been among the reasons for stocks' stellar performance so far this year.
Shares of University of Phoenix owner Apollo Group (APOL) rose 7.1 percent to $18.25 after the company reported a better-than-expected profit even as student sign-ups fell for the fourth straight quarter. The stock was the S&P 500's biggest percentage gainer.
Best Buy Co Inc (BBY) shares rose 1.8 percent to $23.20 after the company said that founder Richard Schulze would rejoin the consumer electronics retailer as chairman emeritus and add two of his former colleagues to the board. The news helped dispel rumors that the largest investor in the world's largest consumer electronics chain was contemplating selling his stake in the company.
Volume was roughly 5.8 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.
Decliners outnumbered advancers on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about 13 stocks fell for every 12 that rose.