Dow Falls on Cyprus Head Fakes
Stocks were down again on news from Cyprus today. After starting the day in positive territory, the Dow Jones Industrial Average fell on comments from a eurozone finance minister and finished down 64 points, or 0.4%. Earlier in the day, the Dow set a new intraday record, while the S&P 500 came within a point of its all-time closing high.
The Dow headed south around 10:20 a.m., when Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, said that in the future investors in failing banks will be on the hook if the banks go under. However, Dijsselbloem revised his statement later in the day, seemingly walking back on comments about the Cyprus rescue package being used as a template for other debt-ridden nations. The Cyprus bailout appears to mark the end of the "Get Out of Jail Free" cards for profligate eurozone countries. Still, the mixed reactions indicate that the final verdict on the $13 billion package has not yet been rendered.
Bank of America was the worst performer on the Dow today, falling 1.3% in reaction to the Cyprus news. Despite its efforts to shore up its balance sheet, B of A remains more precarious than many of the other "too big to fail" banks, and concerns about the eurozone crisis or depositors having their money confiscated is likely to hurt B of A more than its peers.
Wal-Mart , meanwhile, was the biggest gainer out of the blue chips, as it's largely unaffected by the financial shenanigans in the Mediterranean. The world's biggest retailer also seemed to benefit from Dollar General reporting stronger-than-expected earnings today. Those results likely helped dispel any concerns about the effect of the payroll tax on shoppers or Wal-Mart's own admission in a leaked memo that February sales were extraordinarily slow.
Outside the Dow, Dell was stirring up excitement once again as it appears founder Michael Dell isn't the only one with eyes for his company. Activist investor Carl Icahn said today he's in preliminary talks with private equity giant Blackstone Group about buying out the company. Icahn offered to pay $15 a share for the PC maker while Blackstone would cough up at least $14.25, which beats the price the Michael Dell-led team would pay at $13.65. Dell shares finished the session up 2.6% to close at $14.51.
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