The major indexes all showed solid gains, heading into the three-day weekend for the stock market. The S&P 500 (SPX.X) closed at 14,574.70, above its previous closing record of 1,565.15, reached on October 9, 2007. The KBW Bank Index (I:BKX) was down slightly to close at 56.27.
Banks in Cyrus reopened for the first time since March 16, as customers calmly lined up to make withdrawals after the island nation secured a 10 billion euro bailout for its floundering banking sector. The deal agreement allows Cyprus Popular Bank -- the second largest Cypriot bank -- to fail, with its performing assets folded into the Bank of Cyprus. Depositors in both of the nation's largest banks will take losses initially estimated at roughly 30% on balances above 100,000 euro, while smaller deposit accounts will be unaffected.
Depositors in Cyprus were initially limited to daily withdrawals of 300 euro, and other capital controls were imposed, allowing people leaving the country only to take up to 3,000 euro in cash, in any currency. The government of Cyprus also announced that "Businesses will be able to carry out transactions up to EUR5.000 per day, per account and pay staff salaries. Payments and or transfers outside the Republic, via debit and or credit and or prepaid cards are permitted up to EUR5.000 per month, per person in each credit institution."Cyprus is paying a very high price to remain a member of the euro club. Early on Thursday, Credit Suisse's European Economics Team said it expected "real GDP to decline by more than 20% in the next couple of years, rendering many assumptions of the bail-out obsolete. Cypriot unemployment is likely to rise above 20%." That means that Cyprus could well need an additional bank bailout. That's a very familiar story, when considering the situation in Greece. It's also worth noting that Iceland is not a member of the euro common currency, and the country has rebounded rather nicely from the collapse of its own outsized banking system in 2008. In its report on economic indicators for February, the Central Bank of Iceland said that its economic output had increased year-over-year, for five of the past six quarters. Iceland's unemployment rate at the end of 2012 was 5.4%, which compares quite well with most other countries.
Economic Reports Mostly Negative
The Department of Labor said that initial unemployment claims for the week ended March 23 increased by 16,000 to a seasonally adjusted 357,000, from the previous week's upwardly revised figure of 341,000. That's the sharpest rise in unemployment claims so far this year. Economists on average expected initial jobless claims to come in at 340,000, according to Zacks.