| USA TODAY | - |
Investors
are taking the latest turn in Europe's financial drama in stride. U.S.
stocks recovered most of an early loss Tuesday and ended little changed,
even after lawmakers in Cyprus rejected the terms of a highly unpopular
bailout plan that would have called ...
Stocks take Cyprus bailout vote in stride
Investors are taking the latest turn in Europe's financial drama in stride.
U.S. stocks recovered most of an early loss Tuesday and ended little changed, even after lawmakers in Cyprus rejected the terms of a highly unpopular bailout plan that would have called for raiding the bank accounts of ordinary Cypriots.
MORE: Report: Eurozone central bank to keep Cyprus liquid
All three U.S. benchmarks -- the Dow, Nasdaq and S&P 500 indexes -- got a lift from the robust report on February housing starts and building permits but flattened and turned lower in the afternoon.
By the close of trading, the Dow Jones industrial average was up 3.76 points, or 0.03% to 14,455.82. The Standard & Poor's 500 index fell 3.76, 0.24,% to 1,548.34. The Nasdaq composite index dipped 8.49, 0.26%, to 3,229.10.
Europe's unresolved debt crisis is still weighing on stocks.
Markets slumped worldwide Monday after Cyprus and its European partners announced a proposal to seize money from depositors' accounts to help pay for a bailout of the country's banks. Investors sold stocks on concern that the plan would cause a run on banks in the countries using the euro.
On Monday, the Dow dropped 0.4% to 14,452.06. The S&P 500 index fell 0.6% to 1,552.10. The Nasdaq composite index dropped 0.4% to 3,237.59.
But on Tuesday, Cyprus' Parliament voted down the proposed tax on deposits. European markets were already closed and U.S. markets showed little reaction.
"The situation in Cyprus is keeping everyone glued to their TVs," said Joseph Tanious, a director at J.P. Morgan Funds.
Tanious says investors shouldn't immediately overreact to the news coming out of Europe, but instead take a step back and remember that Mario Draghi, the European Central Bank President, pledged last year to do all he could to preserve the euro.
"Do not underestimate the power of the ECB," says Tanious.
U.S. stocks started the day higher after the government reported that U.S. builders started construction on more houses and apartments in February, boosting optimism that the housing market is recovering. The Dow rose as much as 62 points before turning lower shortly before noon.
Builders broke ground on homes last month at the second-fastest pace since June 2008. Building permits, an indicator of future construction plans, also jumped 4.6 percent. The report, which was stronger than analysts expected, sent the stocks of homebuilders higher. PulteGroup rose 16 cents to $20.97 and Beazer Homes climbed 27 cents to $16.76.
U.S. markets have been on a roll. The Dow is up 10% this year and broke through its previous all-time high on March 5, driven by strength in the housing market and a pickup in hiring. Strong company earnings and continuing stimulus from the Federal Reserve is also helping boost demand for stocks.
The S&P 500 is up 8.2% in 2013 and is 1.4% away from its record close of 1,565.15 reached October 2007.
The Federal Reserve opens its second policy meeting of the year Tuesday. On Wednesday, it will issue a policy statement and update its economic forecasts. Economists and investors don't expect the Fed to let up in its drive to keep stimulating the economy by keeping interest rates at historic lows.
"The Fed has clearly been a big push in this market, no question," said Maury Fertig, chief investment officer at Relative Value Partners. "What the Fed has done has really helped the market recover....they're not going to pull away prematurely."
Investors are increasingly putting more money to stocks, according to a Bank of America Merrill Lynch survey, published Tuesday. The survey of fund managers showed that 57 percent of investors favored allocating money to stocks, the highest percentage in more than two years.
The yield on the 10-year Treasury note, which moves inversely to its price, fell to 1.91% from 1.96%.
In Asia, most benchmarks fell, while Japan's Nikkei 225 index jumped 2.03% to 12,468.23.
Hong Kong's Hang Seng shed morning gains to fall 0.2% to 22,041.86. South Korea's Kospi rose 0.5% to 1,978.56. Benchmarks in Singapore, Taiwan and Indonesia were also higher, while Thailand and the Philippines dropped. After opening higher, Australia's S&P/ASX 200 reversed course and fell 0.5% to close at 4,992.20.
In Europe, the FTSE 100 index of leading British shares was down 0.08% to 6453.07 while Germany's DAX fell 0.56% to 7965.55. The CAC-40 in France was 1.08% lower at 3784.17.
The euro steadied after falling Monday to its lowest level against the dollar in 2013. It was trading flat at $1.2938. Oil prices were largely unchanged too, with the benchmark New York rate down a cent at $94.10 a barrel.
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U.S. stocks recovered most of an early loss Tuesday and ended little changed, even after lawmakers in Cyprus rejected the terms of a highly unpopular bailout plan that would have called for raiding the bank accounts of ordinary Cypriots.
MORE: Report: Eurozone central bank to keep Cyprus liquid
All three U.S. benchmarks -- the Dow, Nasdaq and S&P 500 indexes -- got a lift from the robust report on February housing starts and building permits but flattened and turned lower in the afternoon.
By the close of trading, the Dow Jones industrial average was up 3.76 points, or 0.03% to 14,455.82. The Standard & Poor's 500 index fell 3.76, 0.24,% to 1,548.34. The Nasdaq composite index dipped 8.49, 0.26%, to 3,229.10.
Europe's unresolved debt crisis is still weighing on stocks.
Markets slumped worldwide Monday after Cyprus and its European partners announced a proposal to seize money from depositors' accounts to help pay for a bailout of the country's banks. Investors sold stocks on concern that the plan would cause a run on banks in the countries using the euro.
On Monday, the Dow dropped 0.4% to 14,452.06. The S&P 500 index fell 0.6% to 1,552.10. The Nasdaq composite index dropped 0.4% to 3,237.59.
But on Tuesday, Cyprus' Parliament voted down the proposed tax on deposits. European markets were already closed and U.S. markets showed little reaction.
"The situation in Cyprus is keeping everyone glued to their TVs," said Joseph Tanious, a director at J.P. Morgan Funds.
Tanious says investors shouldn't immediately overreact to the news coming out of Europe, but instead take a step back and remember that Mario Draghi, the European Central Bank President, pledged last year to do all he could to preserve the euro.
"Do not underestimate the power of the ECB," says Tanious.
U.S. stocks started the day higher after the government reported that U.S. builders started construction on more houses and apartments in February, boosting optimism that the housing market is recovering. The Dow rose as much as 62 points before turning lower shortly before noon.
Builders broke ground on homes last month at the second-fastest pace since June 2008. Building permits, an indicator of future construction plans, also jumped 4.6 percent. The report, which was stronger than analysts expected, sent the stocks of homebuilders higher. PulteGroup rose 16 cents to $20.97 and Beazer Homes climbed 27 cents to $16.76.
U.S. markets have been on a roll. The Dow is up 10% this year and broke through its previous all-time high on March 5, driven by strength in the housing market and a pickup in hiring. Strong company earnings and continuing stimulus from the Federal Reserve is also helping boost demand for stocks.
The S&P 500 is up 8.2% in 2013 and is 1.4% away from its record close of 1,565.15 reached October 2007.
The Federal Reserve opens its second policy meeting of the year Tuesday. On Wednesday, it will issue a policy statement and update its economic forecasts. Economists and investors don't expect the Fed to let up in its drive to keep stimulating the economy by keeping interest rates at historic lows.
"The Fed has clearly been a big push in this market, no question," said Maury Fertig, chief investment officer at Relative Value Partners. "What the Fed has done has really helped the market recover....they're not going to pull away prematurely."
Investors are increasingly putting more money to stocks, according to a Bank of America Merrill Lynch survey, published Tuesday. The survey of fund managers showed that 57 percent of investors favored allocating money to stocks, the highest percentage in more than two years.
The yield on the 10-year Treasury note, which moves inversely to its price, fell to 1.91% from 1.96%.
In Asia, most benchmarks fell, while Japan's Nikkei 225 index jumped 2.03% to 12,468.23.
Hong Kong's Hang Seng shed morning gains to fall 0.2% to 22,041.86. South Korea's Kospi rose 0.5% to 1,978.56. Benchmarks in Singapore, Taiwan and Indonesia were also higher, while Thailand and the Philippines dropped. After opening higher, Australia's S&P/ASX 200 reversed course and fell 0.5% to close at 4,992.20.
In Europe, the FTSE 100 index of leading British shares was down 0.08% to 6453.07 while Germany's DAX fell 0.56% to 7965.55. The CAC-40 in France was 1.08% lower at 3784.17.
The euro steadied after falling Monday to its lowest level against the dollar in 2013. It was trading flat at $1.2938. Oil prices were largely unchanged too, with the benchmark New York rate down a cent at $94.10 a barrel.
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