North American stocks fell on Monday amid anxiety over an unexpected weekend bailout plan for cash-strapped Cyprus – though major indexes ended well above earlier lows.
The S&P 500 closed at 1552.10, down 8.60 points or 0.6 per cent – after falling as low as 1545 in early trading. The blue-chip Dow Jones industrial average closed at 14,452.06, down 62.05 points or 0.4 per cent. In Canada, the S&P/TSX composite index closed at 12,781.76, down 48.27 points or 0.4 per cent.
The moves come as the world reacts to the latest flareup of the financial crisis in the euro zone, with attention turning from Spain and Italy to Cyprus. There, a plan to pay for a bailout of the country's banks with a tax on bank deposits has fed concerns about a more general flight of capital from Europe should similar bailouts be proposed for larger countries, or should banking customers lose faith in their banks. Adding to the instability is the fact that Cyprus has delayed a vote on the plan until Tuesday, with banks closed for most of the week.
The setback comes as major U.S. stock market indexes have been on a tear for most of March, with the Dow hitting a succession of record highs last week and rising for 10 consecutive days, before finally ending the winning streak on Friday. The gains follow some upbeat economic numbers, including an upbeat reading on U.S. payroll gains in February.
This week, the Federal Reserve will meet to discuss monetary policy, culminating in the release of its policy statement on Wednesday.
Within the S&P 500, financials were among the worst hit sectors, suggesting unease about how U.S. banks with overseas operations will be affected by events in Europe. JPMorgan Chase & Co. fell 1 per cent, Citigroup Inc. fell 2.2 per cent and Goldman Sachs Group Inc. fell 1.9 per cent.
Among Canadian banks, Royal Bank of Canada fell 0.4 per cent and Toronto Dominion Bank fell 0.6 per cent.
In the United States, a confidence reading among homebuilders slid for the second straight month, though some homebuilding stocks were not affected. Toll Brothers and PulteGroup Inc. closed unchanged.
Gold got a boost from the international uncertainty, rising to $1,603.50 an ounce, up $10.90. Crude oil rose to $93.60 a barrel, up 15 cents. Among Canadian commodity producers, Barrick Gold Corp. rose 1.3 per cent and Suncor Energy Inc. fell 1.9 per cent.
Bombardier Inc. fell 2.3 per cent after a European newspaper reported that its transportation division will face a large financial penalty for a late delivery of trains for Swiss Federal Railways. Bombardier said the report was not accurate.