NEW YORK REPORT
THE S&P 500 fell for a third day yesterday but pared losses late in the day after the parliament of Cyprus rejected a proposed tax on bank deposits.
The proposed tax on savings in banks had been a condition of a European bailout. When the Cypriot parliament rejected the tax, the decision eased worries that savers will begin withdrawing funds. At the same time, it left efforts to rescue the country, the latest casualty of the Eurozone debt crisis, up in the air.
“Regardless of the vote in Cyprus, we still have the problem. No one knows: ‘what is the Cypriot financial restructuring going to look like?’” said Nicholas Colas, chief market strategist at the ConvergEx Group.
Banks in Cyprus will remain closed until tomorrow.
The S&P 500’s retreat followed a long streak of gains where the index came close to hitting its all-time closing high set in 2007. The S&P 500 is still on track to post its best quarter in a year. The benchmark S&P 500 is up 8.4 per cent for the year, while the Dow is up 10.3 per cent.
Energy shares led the day’s decline following a drop in oil prices and a slide in the shares of oil services companies. The PHLX oil services sector index dropped two per cent. Shares of Schlumberger fell 3.1 per cent to $73.98. The stock of Halliburton dropped 2.7 per cent to $39.62.
The Dow Jones industrial average edged up 3.76 points, or 0.03 per cent, to close at 14,455.82.
The Standard & Poor’s 500 Index fell 3.76 points, or 0.24 per cent, to finish at 1,548.34. The Nasdaq Composite Index slipped 8.50 points, or 0.26 per cent, to close at 3,229.10.
The CBOE Volatility Index or VIX, Wall Street’s favorite barometer of fear, rose 7.71 per cent to end at 14.39. Earlier, the VIX hit an intraday high of 15.40.