U.S. stocks fell, after the Dow Jones Industrial Average reached record highs last week, as a levy imposed by euro-area leaders on Cypriot bank deposits sparked concern the region’s debt crisis is intensifying.
Eight of 10 groups in the S&P 500 fell as financial shares dropped the most, sinking 0.8%. Schlumberger Ltd. retreated 3.3% after saying North American activity was below estimates. Carnival Corp. declined 2.5% amid analyst downgrades. Apple Inc. and Hewlett-Packard Co. each climbed 2.6% to lead a rebound in technology shares.
The Standard & Poor’s 500 Index slid 0.4% to 1,554.61 at 3:23 p.m. in New York, paring an earlier 1% drop. The Dow declined 42.92 points, or 0.3%, to 14,471.19. today. Trading in S&P 500 stocks was 11% below the 30-day average at this time of day.
“We’ve had a wonderful market and somewhat carefree attitude,” Richard Sichel, who oversees about $1.8 billion as chief investment officer at Philadelphia Trust Co., said in a phone interview. “Now here’s sort of a dose of reality, and although it’s such a small country, but what they’re doing sort of sends shivers through investors and other countries.”
Euro-region finance ministers forced depositors in Cypriot banks to share in the cost of rescuing the island nation, reducing the cost of the bailout by 5.8 billion euros ($7.5 billion) to 10 billion euros. The country accounts for less than half a% of the 17-nation euro-area economy.
A parliamentary vote on the levy due to take place today was postponed. Equity markets are closed in Cyprus and Greece for a scheduled bank holiday today. Cypriot banks will remain closed tomorrow and March 20, a government official said, asking not to be identified.
European policy makers signaled flexibility on the application of an unprecedented bank tax in Cyprus, seeking to overcome outrage that threatens to derail the nation’s bailout.
“We’re starting to see some talk that they may back away from this a little bit and that may have helped the market,” James Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.4 billion in assets, said in a telephone interview. “The big question is if they’re going to continue with this so-called wealth tax, and how long it takes the market to realize this is a really bad thing.”