Stocks falter on Cyprus bank plan

Posted: March 20, 2013

NEW YORK - Stocks closed lower Monday as investors worried that a controversial proposal to seize money from depositors in Cyprus could set off another bout of anxiety over the euro.

The Dow Jones industrial average fell 62.05 points, or 0.4 percent, to close at 14,452.06. It plunged as much as 110 points in the early going, briefly turned positive in the afternoon, then fell back again in the last hour of trading.

The Standard & Poor's 500 fell 8.60 points, or 0.6 percent, to 1,552.10. The Nasdaq composite dropped 11.48 points, or 0.4 percent, to 3,237.59.

European markets recovered most of an early slide and closed with modest losses. Yields on government bonds issued by Spain and Italy edged higher, and the euro fell to a three-month low against the dollar.

The market rally that has pushed the Dow to record levels this year has been punctuated by concerns about the 17-nation eurozone's lingering debt crisis. The Dow fell 1.6 percent Feb. 25, its biggest wobble this year, after elections in Italy threw the country into political paralysis, endangering economic reforms.

"Europe has got problems," said Uri Landesman, president of Platinum Partners, a hedge fund. "You could get more stuff like this, and the market isn't priced to handle that."

A weekend agreement between Cyprus and its European partners called for the government to raid bank accounts as part of a 15.8 billion euro ($20.4 billion) financial bailout, the first time in the eurozone crisis that the prospect of seizing individuals' savings has been raised. The plan, which may be modified, stoked fears of bank runs in the other countries that use the currency.

Financial stocks were the biggest decliners in the S&P 500 Monday. Morgan Stanley fell 60 cents, or 2.5 percent, to $22.99. Citigroup dropped $1.02, or 2.2 percent, to $46.24.

Goldman Sachs said Monday that it had lifted its end-of-year target for the S&P 500 to 1,625 from its previous target of 1,575. The investment bank is forecasting the U.S. economy will grow 2 percent this year and 2.9 percent next year.

Among other stocks making big moves, Schlumberger dropped $3.06, or 3.9 percent, to $76.34 after the oil field services company said first-quarter activity was below its expectations as customers reactivated fewer rigs than forecast.

Boeing fell $1.25, or 1.4 percent, to $85.18 after archrival Airbus signed its biggest deal ever Monday. The European plane maker won an order from Indonesia's Lion Air worth 18.4 billion euros ($24 billion) for its short-haul A320 and A321 jets.

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