Markets End Lower Despite Cyprus Deal
(NEW YORK) — Despite a deal for the financially troubled island country of Cyprus, the major U.S. indices ended the day down.
The Dow Jones Industrial Average closed the day at 14,447.75, down 64.28 points. The Nasdaq Composite lost 9.7 points to finish at 3,235.30. The S&P 500 gave up 5.2 points, and closed the day at 1,551.69.
The Dutch finance minister, Jeroen Dijsselbloem, spooked global markets a bit Monday when he said that the Cyprus solution could be a template for future bailouts. The Cyprus bailout hit two groups that had, so far, been spared in the European bailouts: people with deposits above the insured amount and some bondholders.
Dijsselbloem later clarified his remarks, saying in a statement that Cyprus is a unique case and no models or templates are used. Markets recovered from the worst losses after that statement Monday.
Until now, European leaders have insisted that the Cyprus solution is specific and will not be repeated. If Europeans in countries other than Cyprus begin to think that their bank deposits could be used for bailouts there could be a more widespread run on banks.
There could also be further damage if investors in European banks pull back, fearing that they would have to give up their assets in case of a bailout.
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