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 Dinged on Fitful Outlook for Eurozone

NEW YORK ( TheStreet) -- U.S. stocks fell Monday, reversing morning gains, on concern the painful bailout measures forced on Cyprus's citizens and Russian depositors has set a troubling precedence for other troubled Eurozone nations, most notably Italy and Spain.

"While the Cypriot banking package has averted imminent disaster, the episode will have damaging effects on Cyprus's economy and has raised new questions over the stability of the currency union," said Jonathan Loynes, chief European economist at Capital Economics in London in a note.

The S&P 500 fell 0.33% to 1,551.69 after gaining as much as 0.52%.

Red Hat (RHT - Get Report) shares slid 3.6% to $48.99 after the largest seller of Linux operating system software was cut to "market perform" from "outperform" by Raymond James analyst Michael Turits, who warned that the company's fiscal 2014 revenue guidance may disappoint as the company is at risk of a slowdown in Linux growth.

Shares of eBay (EBAY) sank on Monday as a Stifel Nicolaus analyst of the stock questioned how new fees from Mastercard (MA) and Visa (V) would affect margins on the company's PayPal segment. Shares lost 3.7% to close at $51.31.

The Dow Jones Industrial Average finished lower by 0.44% to 14,447.75 while the Nasdaq dropped 0.3% to 3,235.30.

European markets turned lower as safe-haven assets attracted buyers. The FTSE 100 in London fell 0.22% and the DAX in Germany declined 0.51%.

The benchmark 10-year Treasury was advancing by 2/32, lowering the yield to 1.923%. The dollar was popping 0.62%, according to the U.S. dollar index.

May crude oil futures settled up $1.10 to $94.81 on the New York Mercantile Exchange.

The Cypriot government in negotiations with the International Monetary Fund, the European Commission and the European Central Bank agreed to the deal that will raise €10 billion to recapitalize the country's ailing banks.

The deal will require massive cuts to Cyprus' banking sector which has ballooned from billions of dollars funneled from Russian depositors. To appease local Cypriots, the agreement spares smaller bank depositors, those with under €100,000, from financial losses. A tax will be levied on deposits above €100,000.

Cyprus' second-largest bank, Popular Bank of Cyprus, commonly known as Laiki Bank, will be shuttered, while the country's largest lender, the Bank of Cyprus, will undergo significant restructuring, culminating in losses for both junior and senior bondholders.

Gareth Berry, a currency strategist at UBS AG in Singapore warned that when most banks in Cyprus re-open on Tuesday, withdrawals are likely to surge, reflecting the locals' lack of confidence in the "sanctity of deposits" of its allegedly fortified banks. The decision to seize deposits "isn't likely to be quickly forgotten" anytime soon, he said.

Barry also made note of the dire, long-term economic consequences of the deal: a large portion of Cyprus' €68 billion deposit base will be wiped out or frozen in the process, and therefore won't be available to contribute to economic activity, leading to sharp declines in the country's GDP.

Dell (DELL) gained 2.6% to $14.51 after the biggest private-equity buyout since the financial crisis received competing bids. Dell said on Monday it has two new takeover offers that trump a proposed $13.65 a share deal the company struck with founder Michael Dell and Silver Lake Partners in early February.

Apollo (APOL - Get Report) was one of the top performing stocks on the S&P as shares popped 6.9% to $18.21 after the for-profit education company that owns the University of Phoenix booked better-than-expected second-quarter earnings despite a decline in student enrollments for the fourth consecutive quarter.

McGraw-Hill Companies (MHP) rose 3.4% to $50.03 after the New-York-based company whose brands include Standard & Poor's Ratings Services and Platts announced it will resume its share repurchase program with a $500 million accelerated buyback.

Written by Andrea Tse and Joe Deaux in New York

>To contact the writer of this article, click here: Andrea Tse.

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
DELL $0.00 0.00%
APOL $7.59 0.13%
EBAY $24.61 -0.04%
RHT $73.64 0.00%
AAPL $95.03 0.21%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs