Posted: Mar 18, 2013 10:31 AM by AP
NEW YORK (AP) - Stocks fell for a second day on Wall Street on concern that a proposed bank bailout for the Mediterranean island nation of Cyprus could cause the euro crisis to flare up again.
The Dow Jones industrial average was down 39 points, or 0.3 percent, to 14,472 as of 11 a.m. EDT. The Dow fell as much as 110 points in the early going, before recouping some of its loss.
The Standard & Poor's 500 index fell eight points, or 0.5 percent, to 1,552. The Nasdaq composite dropped 17 points, or 0.5 percent, to 3,232.
Cyprus is proposing a hefty levy on bank deposits as a condition for a national bailout. The proposal roiled international markets and the measures are stoking fears of bank runs in the other 16 nations that use the euro.
Concerns persist about the euro-region's lingering debt crisis, despite a strong rally in stocks since the start of the year that pushed the Dow to record highs. The index fell 1.6 percent Feb. 25, its biggest wobble this year, after elections in Italy threw the country into political paralysis, endangering crucial economic reforms.
Financial stocks led declines on the S&P 500. Investment bank Morgan Stanley was the second-biggest decliner in the S&P 500, falling 96 cents, or 4 percent, to $22.64. Citigroup dropped $1.15 to $46.12.
"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."
Stocks have advanced this year on evidence that the housing market is recovering and signs that hiring is picking up. The rally has also been helped by continuing stimulus from the Federal Reserve and strong company earnings.
The Dow is still up 10.5 percent since the start of the year and surpassed its previous record high close on March 5. It closed lower on Friday, breaking a 10-day winning streak, its longest in 17 years.
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 that the U.S. economy will grow 2 percent this year and 2.9 percent next year. It also predicts that corporate deals and dividend payments will increase.
Homebuilders fell Monday after a report showed that confidence among U.S. homebuilders dropped this month because of concerns that limited land, building materials and labor will slow sales. The National Association of Home Builders/Wells Fargo builder sentiment index fell to 44 from 46 in February, with measures of customer traffic and current sales conditions both declining from February.
D.R. Horton dropped 28 cents to $24.05, cutting this year's gain to 22 percent. PulteGroup fell 20 cents to $20.56, paring its advance this year to 13 percent.
Markets in Europe and Asia also fell. The dollar rose a penny against the euro, its biggest move in a week, to $1.29. Gold rose $16 to $1,608 an ounce. The yield on the 10-year Treasury bond, which moves inversely to its price, dropped to 1.94 percent from 1.99 percent.
Among other stocks making big moves:
- Schlumberger dropped $2.15 to $77.69 after the oilfield services company said that its first quarter activity was below its expectations as customers reactivated fewer rigs than forecast.