Wall Street holds its own after Cyprus ‘no’ vote
NEW YORK — The latest twists in Europe’s debt drama weighed down the stock market Tuesday, offsetting more good news on the U.S. housing market.
The Dow Jones industrial average managed a gain of just four points, while other indexes closed slightly lower. Investors were focused on Cyprus, where the Mediterranean country’s lawmakers voted against a proposed bailout plan for banks that would have called for raiding the savings accounts of ordinary citizens, setting a new precedent in Europe’s ongoing debt crisis.
The plan was rejected — with zero votes in favor — even after being changed to lessen the burden on savers with lower balances. The vote leaves Cyprus’ bailout from international lenders in question, and without external funds the country’s banks could face collapse and the government could wind up having to leave Europe’s joint currency.
The Dow and other U.S. indexes started higher following a report of a surprisingly large increase in new home construction in February. The index gained as much as 62 points in morning trading.
It turned lower at midday as Cyprus’ parliament began debating the contentious plan demanded by the country’s lenders to seize as much as 10 percent of the funds in savings accounts. The market steadied in the afternoon after the vote occurred and a move to delay it was turned down.
The Dow’s biggest wobble this year came Feb. 26, when it lost 1.6 percent after the results of Italian elections left the country in political turmoil, endangering crucial economic reforms. Even that was a less dramatic response than sell-offs a year ago when borrowing rates spiked for Spain and Italy as investors lost confidence in the ability of those countries to service their debt.
On Tuesday the Dow rose 3.76 points, or 0.03 percent, to close at 14,455.82.
Other major market indexes fell slightly. The Standard & Poor’s 500 fell 3.76 points, or 0.2 percent, to 1,548.34. The Nasdaq composite fell 8.50 points, or 0.3 percent, to 3,229.10.