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Major indices ended mixed following investor concerns over Cyprus’ banks operations and weaker-than-expected pending home sales data. Banks in Cyprus are scheduled to re-open on Thursday under strict vigilance. Among the top ten S&P 500 industry groups, healthcare stocks emerged as the biggest gainers while financial stocks were the biggest losers.
The Dow Jones Industrial Average (DJI) lost 0.2% to close the day at 14,526.16. The S&P 500 decreased 0.06% to finish yesterday’s trading session at 1,562.85. The tech-laden Nasdaq Composite Index gained 0.1% to end at 3,256.52. The fear-gauge CBOE Volatility Index (VIX) gained almost 3.0% to settle at 13.15. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.1 billion shares, below 2012’s average of 6.48 billion shares. Advancing stocks outnumbered the decliners. For the 52% that advanced, 44% declined.
For the first quarter 2013, the Dow Jones has gained 10.9%, registering its best performance since gaining 11.3% in the first quarter in 1998. The S&P 500 has gained 9.6% while the Nasdaq has gained 7.9%. The S&P 500 in en route to post gains for the fifth consecutive month. Since the past two weeks the S&P 500 is trading within a band of 10 points but hasn’t surpassed its all-time high. Yesterday’s trading session started with losses as concerns over Cyprus’ bank operations still prevailed among investors. This triggered a sell off owing to which the indices entered negative territory. Later during the trading session, investors took the fall in benchmarks as a buying opportunity and benchmarks recovered from their lows and ended mixed.
Cyprus has caught investors’ attention since mid-March when the country was on the brink of a financial meltdown. Although the country has negotiated a “painful” deal with its Euro Zone partners, investors closely observing the situation. For the first time since March 16, the banks are set to open on Thursday, but will continue operations under strict restrictions. These restrictions are intended to help banks avoid a “run-on”.
However, other banks in Cyprus, apart from Bank of Cyrus, whose deposits amount to 68 billion Euros or 60% of the deposits in the country, will remain unaffected. Most of the money originates from Russia. For the first time since the introduction of the currency Euro, limits will be imposed on how much money an individual or a company can use internationally. People travelling abroad can carry a maximum of 3000 Euros in cash while usage of credit and debit cards has been restricted to 5000 Euros per month. International fund transfers of more than 5000 Euros have been restricted. These transfers can be made only after getting approval and is meant for daily business purposes. Encashment of checks will be banned but money can be transferred into accounts. Cash withdrawal limit will be restricted to a maximum of 300 Euros per day.
On the domestic front, according to the National Association of Realtors, Pending Home Sales Index slipped in February. This data, based on contract signings, declined 0.4% in comparison with the consensus estimate of 1%. In February the index was 104.8, below 105.2 in the previous month but well above 96.6 in February 2012.
Among the top ten S&P 500 industry groups, healthcare stocks performed the best. Health Care SPDR (XLV) gained 0.5%. Stocks such as Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Abbott Laboratories (NYSE:ABT), Amgen, Inc. (NASDAQ:AMGN) and Gilead Sciences, Inc. (NASDAQ:GILD) gained 0.5%, 0.1%, 0.8%, 1.5% and 4.3%, respectively.
Financial stocks suffered the most. Financial Select Sector SPDR (XLF) declined 0.4%. Stocks such as Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), PNC Financial Services (NYSE:PNC) and Citigroup Inc. (NYSE:C) gained 0.4%, 0.9%, 1.8%, 0.1% and 0.8%, respectively.