The U.S. stock market was slightly lower on Tuesday as
investors reacted to news that lawmakers in Cyprus have rejected
a bailout plan which would include a tax on bank accounts in the
Investors are concerned that the banking crisis in Cyprus
could trigger more problems in the euro zone, although the
country only accounts for around 0.2 percent of the EU's economy.
The turmoil in Cyprus, however, has caused the euro to trade
through the $1.30 level to the downside with the EUR/USD last
trading at $1.2875.
The developments in the island nation have also caused a
significant two day rise in the CBOE Volatility Index (VIX),
suggesting that market complacency could be coming to an end.
The Dow Jones Industrial Average added around 4 points, or
0.03 percent, to close just below 14,456.
The S&P 500 lost almost 4 points, or 0.24 percent, to
The Nasdaq Composite shed around 8 points or 0.26 percent, to
Housing starts in the United States rose 0.8 percent for the
month of February to 917,000 compared to a decline of 7.3 percent
in January. This came in above consensus expectations which
called for a rise to 911,000.
Housing starts have been in an uptrend since August 2011 and
the most recent data shows that the market has finally stabilized
with an upward trajectory.
Building permits were 946,000 in February, which was a 4.65
percent increase over a downwardly revised 904,000 in January.
This easily topped consensus estimates which called for 925,000
building permits in February.
Crude oil fell on Tuesday as investors are concerned about a
potential re-flaring of the European sovereign debt crisis in the
wake of the banking problems in Cyprus. Late in the day, NYMEX
crude futures were down around 1.75 percent to $92.11. Brent
futures were last down a little less than 2 percent to $107.53.
Natural gas bucked the trend in the energy market, rising around
2 percent to $3.96.
Precious metals were mixed on the session with gold rising and
silver falling slightly. At last check, COMEX gold futures were
up 0.29 percent to $1,609.20. Silver was down 0.24 percent to
$28.81. Copper was around 1 percent lower on the day to
In the agricultural complex, both corn and wheat rose better
than 1 percent on the session while soybeans were slightly lower.
In soft commodities, cocoa, sugar, orange juice, and cotton all
climbed less than 1 percent, while coffee futures lost a little
less than 1 percent.
Near the close for equities, the iShares Barclays 20+ Year
Treasury Bond ETF (NYSE:
) was up around 0.71 percent to $117.49. Inflows into Treasuries
sent yields lower on U.S. government debt.
Although the 2-Year Note was unchanged at 0.24 percent, the
5-Year yield fell three basis points to 0.78 percent. The yields
on the 10-Year Note and 30-Year Bond both fell five basis points
to 1.91 percent and 3.13 percent, respectively.
The U.S. dollar was higher on Tuesday, which may have helped
restrain risk appetite. The PowerShares DB US Dollar Index
Bullish ETF (NYSE:
), which tracks the performance of the greenback versus a basket
of foreign currencies, had climbed 0.31 percent to $22.61 heading
the equity close.
The closely watched EUR/USD pair was last trading down 0.54
percent to $1.2875. Other movers among currency pairs included
the USD/JPY which fell 0.29 percent, and the USD/CAD, which added
around 0.50 percent.
Volatility and Volume
The VIX jumped a little less than 8 percent to 14.37 on
Tuesday after rising more than 20 percent on Monday. The spike in
the VIX comes despite only moderate losses on the major averages
at the beginning of the week.
Volume finally picked up on Tuesday as investors are getting
more active in the wake of higher volatility. Around 156 million
SPDR S&P 500 ETF (NYSE:
) shares traded hands compared to a 3-month daily average of just
over 130 million.
Lululemon Athletica (NASDAQ:
) fell almost 3 percent after the company recalled a new line of
yoga pants. The stock, however, finished well off of its worst
levels of the day.
Shares of Cardinal Health (NYSE:
) fell around 8 percent on Tuesday after Walgreen Co. (NYSE:
) and Alliance Boots GmbH reached an agreement to source branded
and generic drugs from AmerisourceBergen (NYSE:
). In return, the companies will have the right to buy a minority
stake in the drug wholesaler. The deal hurts Cardinal Health
which use to provide branded drugs to Walgreen.
In the wake of the news, Walgreen was trading up better than 5
percent while Amerisource Bergen shares added more than 3
percent, but fell on an intra-day basis after gapping sharply
higher at the open.
Both the Federal National Mortgage Association (Fannie Mae)
) and the Federal Home Loan Mortgage Corp. (Freddie Mac) (OTC:
) continued to rally on Tuesday after a sharp jump to start the
trading week on Monday. Fannie Mae was last up better than 30
percent while Freddie Mac had climbed 29 percent.
NPS Pharmaceuticals (NASDAQ:
) climbed more than 9 percent after the company announced that it
had revised its collaboration agreements with Takeda
Pharmaceuticals. NPS will pay Takeda $50 million in stock for the
full global rights to its drug Gattex.
Walter Investment Management (NYSE:
) plunge on the session plummeted almost 21 percent after the
company released its fiscal fourth-quarter earnings results.
) lost more than 6 percent after the company's fiscal
fourth-quarter earnings results.
) added around 7 percent on the session after the company named
Hoby Darling as its new president and CEO. Darling previously
worked at Nike (NYSE:
) as a digital executive.
Video-game publisher Electronic Arts (NASDAQ:
) fell more than 8 percent after the company's CEO John
Riccitiello resigned. Electronic Arts also warned investors that
its quarterly results would come in at or below the bottom end of
its previous guidance range.
) plunged more than 63 percent after the company said it will cut
75 percent of its workforce and potentially sell itself.
Previously, Affymax recalled its antianemia drug following
reports of severe allergic reactions in some kidney-disease
patients, resulting in five deaths.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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