Investing.com - U.S. stocks finished lower on Monday after initial optimism over a bailout for Cyprus quickly evolved into investor unease, as bank depositors and bondholders face losses with the deal.
At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.44%, the S&P 500 index ended down 0.33%, while the Nasdaq Composite index slid 0.30%.
Eurozone policymakers and the International Monetary Fund earlier approved a EUR10 billion rescue package for Cyprus, which sent the stocks gaining amid optimism the deal steers Nicosia away from a messy default and exit from the currency zone, which could have roiled global markets.
As part of the deal, however, Cyprus agreed to close up its second-largest lender, Laiki Bank.
The deal guaranteed that accounts holding EUR100,000 or less will continue to exist and remain insured, likely in another financial institution.
Larger depositors and bondholders in the bank, however, face haircuts, which sent stocks dipping and investors chasing safe-haven dollar positions on fears that depositors in other European countries may suffer similar fates when bailouts are sought.
Eurogroup head Jeroen Dijsselbloem said earlier that terms of the rescue package may serve as a template for other European bailouts, though the Dutch Finance Minister later backtracked on that statement.
Leading Dow Jones Industrial Average performers included Wal-Mart Stores, up 0.82%, UnitedHealth Group, up 0.77%, and Cisco Systems, up 0.58%.
The Dow Jones Industrial Average's worst performers included Bank of America, down 1.19%, 3M, down 1.17%, and McDonald's, down 1.03%.
European indices, meanwhile, finished lower.
After the close of European trade, the EURO STOXX 50 fell 1.21%, France's CAC 40 fell 0.12%, while Germany's DAX 30 finished down 0.51%. Meanwhile, in the U.K. the FTSE 100 finished down 0.22%.
On Tuesday, the U.S. is to release a flurry of economic data with government reports on durable goods orders and new home sales as well as a report on consumer confidence.
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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.
