This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stocks Fall on Cyprus Contagion Fears, J.C. Penney Pops

NEW YORK ( TheStreet) -- U.S stock slumped on Monday as investors considered that the harsh bailout plan announced for Cyprus could be enacted in other eurozone countries to recapitalize distressed banks.

The S&P 500 slipped 0.55% to 1,551.10.

J.C. Penney (JCP) jumped the most in six months gaining 6.2% to $16.44 after Omar Saad of ISI Group, a research firm, said in a client note that the department store chain may be able to boost its share price by subleting its properties to other businesses, much like a REIT.

The Dow Jones Industrial Average slumped 62.05 points, or 0.43%, to 14,452.06 after ending its longest winning streak on Friday in nearly 17 years. The Nasdaq lost 0.35% to close at 3,237.59.

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. In effect, the bailout calls on depositors to help recapitalize their banks and take losses in process.

Speculation that Spain and Italy could need similar bailouts was sparking concern that depositors large and small will withdraw money from eurozone banks. Major indices throughout Europe and Asia dropped.

"I think the main message in our mind is: is that situation a cause for us to panic over? We would say no, but perhaps it's something to take pause over," said Cameron Hinds, region chief investment officer for Wells Fargo Private Bank. "I think the U.S. markets have handled it pretty well at this point."

"Cyprus is a tiny country and the Troika (European Union, International Monetary Fund and European Central Bank) would probably be disinclined to experiment'' with depositors, John Higgins, senior markets economist at London-based Capital Economics said in a note Monday.

"Yet none of this may reassure depositors in other beleaguered countries of the euro-zone,'' Higgins added. "If the crisis in the region intensifies, queues outside banks are likely to form that much quicker."

"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's Donovan isn't forecasting a eurozone break up yet "the bailout of Cyprus over this weekend has not helped that conviction ... and contagion risks are higher as a result of the terms of the bailout."

The FTSE 100 in London settled down 0.49% and the DAX in Germany shed 0.4%.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BBY $32.34 -0.95%
ISRG $624.99 -1.00%
AAPL $93.30 -1.60%
FB $116.78 0.04%
GOOG $692.63 0.23%


Chart of I:DJI
DOW 17,750.91 -79.85 -0.45%
S&P 500 2,066.13 -9.68 -0.47%
NASDAQ 4,777.1220 -28.1690 -0.59%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs