Wall Street Continues its Losses Amid Cyprus Uncertainty and the Fed’s Open Market Committee

Michael Teague  |

The Cypriot parliament’s 36-19 vote rejecting an E.U. bailout deal that would impose a revised levy on private bank accounts gave cause for further uncertainty on Wall Street on Tuesday, as stocks dragged for a third straight day.

The Dow Jones Industrial Average closed just 0.03 percent above yesterday’s low to end at 14,455.82, while the Nasdaq Composite lost 0.26 percent to 3,229.10, and the S&P 500 shed 0.24 percent to close at 1,548.34, distancing itself even further from the record-high that was well within reach only last Thursday.

Good news came in the form of the Commerce Department’s report that housing starts were up 0.8 percent for February, to a rate of 917,000-units per annum, 2000 units more than economist estimates.  There were also more new construction permits than at any point since 2008.

Notable losses for the day included the apparel company Lululemon Aethletica (LULU), who closed down 2.82 percent to end the day at $64.09 per share, after the company announced that it would be recalling its line of black Luon yoga stretch-pants subsequent to complaints about the garment being too revealing. Earlier in the day shares were down as much as 8 percent before climbing back.

The pharmaceutical company Affymax (AFFY) dropped just over 64 percent of its share price to close at $1.05, after the company announced that it plans to lay off three quarters of its employees and consider either sale or bankruptcy.  The company’s only product, the kidney disease-induced anemia treatment Omontys, was recalled when five patients died as a result of taking the drug.

After a brief boost in late trading on Monday, the video game maker Electronic Arts (EA) was down 8.34 percent to close at $17.15, a reaction to analyst warnings of uncertainty at the company after the resignation of CEO John Riccietello.

The banking giant J.P Morgan Chase (JPM) continued its streak of losses, down another 0.63 percent to close at $49.20, the result of recent bad press regarding both its stress test contingency plan, continuing bad press from last year’s trading scandal in the UK, as well as the tremors being sent through financial institutions by the Cyprus bailout saga.

There was a bit of good news for Dell (DELL), whose shares jumped almost 1 percent after the prior evening’s revelation that the Blackstone Group (BX) was considering a counter offer to the Michael Dell/Silverlake Management LLC $13.65-per share buyout plan.  Dell closed at $14.31 per share.

Other gainers included the drug and convenience store Walgreens (WAG), up 5.26 percent to $44.66 on news that it and its partner Alliance Boots signed a $400 billion, 10-year contract with drug distributor AmerisourceBergen that would make the company the world’s largest buyer of prescription drugs.  Bank of America also gained 1.23 percent, closing at $12.72, on continued enthusiasm resulting from the Fed’s approval of its $5 billion stock buyback plan.

Trading begins tomorrow with the cloud not only of Cyprus hanging over it, but also of the results of the Federal Reserve’s Open Market Committee meeting, which has many on the lookout for any sign of reduction in the quantitative easing program which has been propping up markets to the tune of $85 billion a month.

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