After a seesawing session on Tuesday, stocks ended the day relatively flat, after investors weighed uncertainty about the Cyprus bailout with another upbeat report on the U.S. housing market.
The S&P 500 closed at 1548.34, down 3.76 points or 0.2 per cent – recovering about 10 points from its low. The blue-chip Dow Jones industrial average closed at 14,445.82, up 3.76 points or about zero per cent. Canada’s S&P/TSX composite index closed at 12,773.87, down 7.89 points or less than 0.1 per cent.
In Cyprus, parliament rejected a €10-billion bailout proposal that would have drawn funds from the country’s bank depositors, including wealthy Russians – and instead Cyprus’s finance minister has asked Moscow for economic assistance.
The rejection of the bailout proposal from the European Union has ratcheted up uncertainty over what happens next, feeding concerns about a full-blown banking crisis in Cyprus and the country’s exit from the euro zone.
Despite the relative calm in North American equity markets, there were signs of concern elsewhere.
Bond yields of some European countries rose in reaction. The yield on the Italian 10-year government bond moved above 4.7 per cent, up more than 9 basis points. Portugal’s 10-year bond moved above 6.1 per cent, up 18.7 basis points.
Investors moved into the perceived safety of U.S. government bonds. The yield on the 10-year Treasury bond fell more than 5 basis points, to about 1.9 per cent.
Amid the uncertainty, the CBOE volatility index, or VIX, rose 7.7 per cent. The gain in the so-called fear gauge followed an 18 per cent spike on Monday, though from very low levels.
Gold also moved higher, to $1,611.40 (U.S.) an ounce, up $6.80 – for its sixth gain in seven sessions.
The anxiety in Europe followed an upbeat reading on the recovering U.S. housing market. Housing starts in February rose 0.8 per cent and building permits rose 4.6 per cent, rising to a five-year high. PulteGroup Inc., a homebuilder, rose 0.3 per cent and Toll Brothers Inc. rose 1.1 per cent.
Video-game maker Electronic Arts Inc. slumped 8.3 per cent after it announced that its chief executive is stepping down.
Lululemon Athletica Inc. fell 2.6 per cent in Toronto after a product recall on a line of yoga pants resulted in a lowered sales forecast.
Among Canadian commodity producers, Suncor Energy Inc. fell 0.2 per cent and Barrick Gold Corp. rose 0.2 per cent.