[h=3]By CHRIS DIETERICH[/h]NEW YORK—Stocks reversed an early bounce as investors' initial enthusiasm for an agreement on Cyprus gave way to concerns that the deal could set a worrisome precedent for resolving banking issues moving forward.
The Dow Jones Industrial Average slipped 44 points, or 0.3%, to 14467, after climbing as much as 52 points shortly after the opening bell.
The S&P 500-stock index fell two points, or 0.1%, to 1554 in midday trading. On Friday, the S&P 500 closed within 0.6% of its all-time closing high of 1565.15 set on Oct. 9, 2007. The benchmark came within one point of surpassing that level Monday morning before turning lower. The Nasdaq Composite dropped eight points, or 0.2%, to 3237.
Stocks initially followed overseas equity markets higher after Cyprus secured a bailout from its international creditors, helping stave off a potential exit from the euro zone by the island nation. Investors were shaken last week by Cyprus' uncertain financial future; the agreement came as Cyprus approached a deadline that would have cut off emergency said to its banking system.
But enthusiasm for the deal faded on both sides of the Atlantic. The Stoxx Europe 600 dropped 0.3% after climbing as much as 1%, with financial stocks hit particularly hard. The euro, which had risen overnight to a one-week high against the dollar, slipped lower versus the U.S. currency.
The deal provides €10 billion ($13 billion) in financing for Cyprus but also includes shutting down the country's second-largest bank, Cyprus Popular Bank PCL, and downsizing the largest bank, Bank of Cyprus. The deal imposes losses on deposits of more than €100,000.
"What seemed like a relief rally has gone by the wayside," said Colin Devlin, director and trader at Knight Capital . "Bank deposits are now a legitimate target—it just seems like anything that was positive quickly turned into more questions, more doubts."
Stocks retreated after reports that Dutch Finance Minister Jeroen Dijsselbloem, could usher in a new template for resolving future bank problems in the euro zone. The reports "ramped contagion fears," said Dave Lutz, a managing director at Stifel, Nicolaus & Co. "The bottom line, the Street hates uncertainty—this is a big unknown."
Front-month May crude-oil futures rose 1% to $94.60 a barrel, while March gold futures slid 0.4% to $1,599 a troy ounce. The yield on benchmark 10-year Treasury notes fell to 1.923%.
Asian markets were mostly higher on the Cyprus deal. Japan's Nikkei Stock Average rose 1.7% and Australia's S&P ASX 200 gained 0.5%.
In U.S. economic news, a reading on manufacturing activity in the Dallas region in March rose from a month earlier.
In corporate news, Dell rose after the PC maker confirmed it received alternative buyout proposals from Blackstone Group and investor Carl Icahn.
Apollo Group was the biggest gainer on the S&P 500 after the for-profit education company reported fiscal second-quarter earnings and revenue that beat analyst forecasts, helped by a sharp drop in provisions for uncollectable accounts receivable.
Research In Motion extended the sharp losses seen on Friday after the sales introduction of the company's new BlackBerry Z10 smartphone failed to generate the buzz of rival smartphone launches.
Quicksilver Resources gained after the oil-and-gas exploration and production company said its net loss for the fourth quarter and full year were smaller than it previously reported, after the company restated its results to correct errors related to the accounting for derivatives.
Idenix Pharmaceuticals slumped 13% after unfavorable ruling by U.S. Patent and Trademark Office against the company regarding its patent applications for certain compounds used in its hepatitis C treatment.
United Therapeutics lost 2% after the U.S. Food and Drug Administration rejected its treatment for pulmonary arterial hypertension, again.
Write to Chris Dieterich at [email protected]
The Dow Jones Industrial Average slipped 44 points, or 0.3%, to 14467, after climbing as much as 52 points shortly after the opening bell.
The S&P 500-stock index fell two points, or 0.1%, to 1554 in midday trading. On Friday, the S&P 500 closed within 0.6% of its all-time closing high of 1565.15 set on Oct. 9, 2007. The benchmark came within one point of surpassing that level Monday morning before turning lower. The Nasdaq Composite dropped eight points, or 0.2%, to 3237.
Stocks initially followed overseas equity markets higher after Cyprus secured a bailout from its international creditors, helping stave off a potential exit from the euro zone by the island nation. Investors were shaken last week by Cyprus' uncertain financial future; the agreement came as Cyprus approached a deadline that would have cut off emergency said to its banking system.
But enthusiasm for the deal faded on both sides of the Atlantic. The Stoxx Europe 600 dropped 0.3% after climbing as much as 1%, with financial stocks hit particularly hard. The euro, which had risen overnight to a one-week high against the dollar, slipped lower versus the U.S. currency.
The deal provides €10 billion ($13 billion) in financing for Cyprus but also includes shutting down the country's second-largest bank, Cyprus Popular Bank PCL, and downsizing the largest bank, Bank of Cyprus. The deal imposes losses on deposits of more than €100,000.
"What seemed like a relief rally has gone by the wayside," said Colin Devlin, director and trader at Knight Capital . "Bank deposits are now a legitimate target—it just seems like anything that was positive quickly turned into more questions, more doubts."
Stocks retreated after reports that Dutch Finance Minister Jeroen Dijsselbloem, could usher in a new template for resolving future bank problems in the euro zone. The reports "ramped contagion fears," said Dave Lutz, a managing director at Stifel, Nicolaus & Co. "The bottom line, the Street hates uncertainty—this is a big unknown."
Front-month May crude-oil futures rose 1% to $94.60 a barrel, while March gold futures slid 0.4% to $1,599 a troy ounce. The yield on benchmark 10-year Treasury notes fell to 1.923%.
Asian markets were mostly higher on the Cyprus deal. Japan's Nikkei Stock Average rose 1.7% and Australia's S&P ASX 200 gained 0.5%.
In U.S. economic news, a reading on manufacturing activity in the Dallas region in March rose from a month earlier.
In corporate news, Dell rose after the PC maker confirmed it received alternative buyout proposals from Blackstone Group and investor Carl Icahn.
Apollo Group was the biggest gainer on the S&P 500 after the for-profit education company reported fiscal second-quarter earnings and revenue that beat analyst forecasts, helped by a sharp drop in provisions for uncollectable accounts receivable.
Research In Motion extended the sharp losses seen on Friday after the sales introduction of the company's new BlackBerry Z10 smartphone failed to generate the buzz of rival smartphone launches.
Quicksilver Resources gained after the oil-and-gas exploration and production company said its net loss for the fourth quarter and full year were smaller than it previously reported, after the company restated its results to correct errors related to the accounting for derivatives.
Idenix Pharmaceuticals slumped 13% after unfavorable ruling by U.S. Patent and Trademark Office against the company regarding its patent applications for certain compounds used in its hepatitis C treatment.
United Therapeutics lost 2% after the U.S. Food and Drug Administration rejected its treatment for pulmonary arterial hypertension, again.
Write to Chris Dieterich at [email protected]