Stock Futures Fall on Cyprus Bailout Plan, Debt Contagion Fears
NEW YORK ( TheStreet) -- Stock futures were signaling a down day for major U.S. markets Monday as a shocking bailout plan for Cyprus reignited eurozone financial contagion fears and spurred selling around the globe.
Futures for the Dow Jones Industrial Average were slumping 77 points, or 84.11 points below fair value, to 14,356.
Futures for the S&P 500 were slipping 13.5 points, or 14.2 points below fair value, to 1,540. The index failed to reach a record closing high on Friday as investors retreated from equities on a plunge in consumer confidence.
Futures for the Nasdaq were lower by 21 points, or 22.91 points below fair value, at 2,769.5.Eurozone finance ministers agreed Saturday on a bailout plan for Cyprus that requires a levy of a 9.9% tax on bank accounts with balances above €100,000 and those with less that amount to be taxed at a 6.75% to raise €5.8 billion for the near-bankrupt nation. Speculation that Spain and Italy could be next in this unprecedented move to force depositors to contribute to a bailout and take losses was sparking fears of a run on banks across the eurozone. "Every euro area finance minister should be reminded, daily, that history tells us that monetary unions die as a result of bank runs," Paul Donovan, managing director of global economics at UBS in London, said in a note Monday. UBS doesn't think that the eurozone will break up. However "the bail out of Cyprus over this weekend has not helped that conviction ... and contagion risks are higher as a result of the terms of the bailout," said Donovan. Investors piled into gold, Treasuries and the U.S. dollar as eurozone contagion fears spurred safe-haven buying. The euro was plunging 1.02% against the greenback. The benchmark 10-year Treasury yield skidded to 2.023% as prices surged by 14/32 and the dollar was rising 0.51%, according to the
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