The tiny island nation of Cyprus is rattling the global financial markets.
First the scoreboard:
Dow: 14,452, -62.0 pts, -0.4 percent
S&P 500: 1,552, -8.6 pts, -0.6 percent
NASDAQ: 3,237, -11.4 pts, -0.3 percent
And now the top stories:
- On Saturday, EU leaders announced a 10 billion euro bailout deal for Cyprus that would involve a surprise levy on Cypriot bank depositors. This sent depositors running to ATMs to drain their accounts. In addition to Cypriot mom and pops, Russian oligarchs, mobsters, and money launderers are also expected to take a hit.
- But given the market's minimal reaction, traders seem to think that the global damage will be minimal.
- Experts, however, seem to be concerned that this sets a bad precedent. Specifically, depositors might fear their money could eventually be subject to surprise levies. Jefferies' David Zervos told Bloomberg Television that markets were underpricing the risks. "I guess I'm a little surprised at how complacent the markets are on this," he said.
- In U.S. economic news, the NAHB homebuilder confidence index unexpectedly fell to 44. Economists were expecting it to increase to 47. "That said, even with the recent sideways trend, the level of the index is still high enough to signal rapid growth in starts and new home sales," reassured UBS economist Sam Coffin.
- Since Friday, at least four top Wall Street strategists have raised their targets for the S&P 500. Goldman Sachs raised its target to 1,625 from 1,575; Deutsche Bank raised its target to 1,625 from 1,600; Credit Suisse raised its target to 1,640 from 1,550; and Morgan Stanley raised its target to 1,600 from 1,434.
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