Renewed worries about Europe’s debt crisis weighed on the stock market on Wednesday and held the Standard Poor’s 500-stock index back from reaching a nominal high.
Investors are watching to see if Cyprus can shore up its banking system. They are also concerned about Italy, where political parties are struggling to form a new government.
The Standard Poor’s 500-stock index slipped 0.92 point to 1,562.85, less than three points short of its high set in October 2007.
The Dow Jones industrial average fell 33.49 points to close at 14,526.16, a loss of 0.2 percent. It had dropped as much as 120 points in morning trading, then spent the rest of the day climbing back.
The Nasdaq composite index edged up 4.04 points, or 0.1 percent, to 3,256.52.
Bad news from Europe and good news from the United States have tossed the stock market around over the last week. Stocks slumped on Monday as Cyprus scrambled to rescue its banks. They rallied on Tuesday on stronger home prices and an increase in factory orders.
“There are still plenty of worries about the banking system” in Europe, said J. J. Kinahan, chief derivatives strategist at TD Ameritrade. “But the U.S. really is on a nice little roll.”
Cyprus is preparing to reopen its banks on Thursday after a nearly two-week shutdown. An international bailout requires people with large bank balances to help pay for the rescue.
In Italy, a leading political party failed in its attempt to form a new government. The stalemate has raised fears that the country will be unable to manage its deep debts. Italy has one of the largest economies of the 17 countries that use the euro.
Worries also hit Europe’s bond markets especially hard. Borrowing rates for Italy and Spain shot higher, a sign of weaker confidence in their financial health. Rates for Germany and France, two of Europe’s more stable countries, sank as traders shifted money into their bonds.
Four of the 10 industry groups in the S. P. 500 index edged higher. Utilities and health care, which investors tend to buy when they want to play it safe, made the biggest gains.
Health care is the best-performing industry in the S. P. this year, up 14 percent. That compares with a 10 percent rise for the S. P. 500.
Kim Forrest, a senior equity analyst at Fort Pitt Capital, said it appeared that many investors were treating certain stocks as if they were bonds.
“There’s a recognition that bonds are overpriced, so people are moving into health care and utilities that pay a nice dividend,” she said. “Those are pretty boring investments, and by that I mean their prices don’t move a lot.”
News about Italy also helped drive traders into the safety of United States government bonds, pushing benchmark yields to their lowest level this month. The price of the 10-year Treasury note rose 19/32, to 101 13/32, while its yield dropped to 1.85 percent, from 1.91 percent late Tuesday.
Among the stocks on the move, Cliffs Natural Resources, an iron ore mining company, plunged 14 percent, the biggest loss in the S. P. 500. Analysts warned that falling iron ore prices would most likely sink the company’s stock. Cliffs fell $2.97 to $18.46.
Science Applications International surged 5 percent after the security and communications technology provider reported a fourth-quarter profit that was better than analysts were expecting. The company also announced a special dividend of $1 a share, and its stock gained 50 cents, to $13.32.
Article source: http://www.nytimes.com/2013/03/28/business/daily-stock-market-activity.html?partner=rss&emc=rss
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