Credit: Shutterstock photoEquities are down this morning on renewed European fears but have rebounded from earlier lows.
S&P 500 futures are down about three-quarters of a percent, following losses of a similar magnitude in Europe. They had traded down 2 percent late last night when it was first announced that Brussels wants to force Cyprus to confiscate up to 10 percent of bank accounts. The move incited worries about bank runs across the continent.
Proceeds from the tax would be used to bail out the country's biggest banks, which are under stress because of weakness in neighboring Greece. Asian markets fell on the news, led by a decline of almost 3 percent in Tokyo.
Stocks touched historical highs last week, aided by a tailwind of strong economic data in the United States and a relatively benign political backdrop, which could be threatened by the new developments in Europe. Economic data will also focus on residential real estate and the Federal Reserve's monetary announcement Wednesday afternoon.
The big question now facing investors is how long to wait before buying on today's drop. Large amounts of cash remain on the sidelines, which have kept pullbacks shallow in recent months.
Commodities and foreign exchange are also reacting bearishly to the Cyprus news, with oil down about 1 percent and copper lower by more than 2 percent. Agricultural foodstuffs are lower across the board. Gold is up 0.6 percent but silver remains slightly negative. The euro is down and the safe-haven Japanese yen is up against all other major currencies.
Our researchLAB market-analysis tool mostly shows relative strength in financials and energy in the last week, but sellers are hitting both sectors this morning. Bank of America and Citigroup are both indicated lower by almost 2 percent. The Energy Select Sector SPDR fund (XLE) fell 1 percent.
Elsewhere in company-specific news. J.M. Smucker is down about 2.4 percent after Goldman Sachs downgraded the shares to "sell" from "buy."
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
