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Wall Street Starts Monday on the Wrong Foot, as Eurogroup Head has His in His Mouth

A last minute agreement on a bailout plan between Cyprus and the European Union initially led Wall Street higher on Monday, as the S&P 500 came within a half point of its all-time high in
Michael Teague is a staff writer for Equities.com. His previous experience includes three years as the associate editor of Los Angeles-based Al Jadid Magazine, a bi-annual review of the arts & culture of the Middle East, where he contributed many articles on the region in the form of features and book & film reviews. His educational background includes a BA in French literature from the University of California, Irvine, where he developed a startling proclivity for anything having to do with the 19th century.
Michael Teague is a staff writer for Equities.com. His previous experience includes three years as the associate editor of Los Angeles-based Al Jadid Magazine, a bi-annual review of the arts & culture of the Middle East, where he contributed many articles on the region in the form of features and book & film reviews. His educational background includes a BA in French literature from the University of California, Irvine, where he developed a startling proclivity for anything having to do with the 19th century.

A last minute agreement on a bailout plan between Cyprus and the European Union initially led Wall Street higher on Monday, as the S&P 500 came within a half point of its all-time high in morning trading.

Comments by Dutch finance minister and head of Eurogroup (the meeting of European finance ministers) Jeroen Dijsselbloem that seemed to suggest that the unprecedented bank levy aspect of recent proposals for dealing with the Cyprus financial crisis could become a blueprint for future bailouts, however, scuttled whatever optimism had begun the day.

Cyprus and its benefactors came to an agreement shortly before the E.U.-imposed Monday deadline. The country’s financial system will be restructured through, among other measures, the closure of the island’s second-largest bank, the Popular Bank of Cyprus, along with a levy on uninsured deposits of over 100,000 Euros.

And while Cypriot banks will finally re-open on Tuesday, the country’s two largest, the aforementioned Popular Bank, as well as the Bank of Cyprus will have a cap of 100 Euros a day on withdrawals in order to prevent a run.

Dijsselbloem came later retracted his statement, by which time the damage had already been done. The fear in the Eurozone is that the Cyprus bank tax is a trial balloon for the rest of the continent’s troubled economies.

The S&P 500 lost 0.33 percent to close at 1,551.69, while the Dow was down 0.44 percent to 14,447.74, and the Nasdaq dipped 0.30 percent to end the day at 3,235.30.

Notable gains for the day included Dell Inc. (DELL), up 2.65 percent to $14.52 as Blackstone Group (BX) and famed billionaire investor Carl Icahn were believed to be coming up with a deal to far surpass the $24.4 billion one on offer from the company’s founder and CEO Michael Dell and Silverlake Management.

Best Buy Inc. (BBY) hopped 1.98 percent to close at $23.23 on the announcement that the company’s founder Richard Schulze would rejoin the business in the capacity of chairman emeritus along with two former colleagues.

Dollar General Corp. (DG) rose as much as 5 percent before settling at 2.02 percent, to close at $51.08 on strong earnings.

EBay Inc (EBAY) was down 3.68 percent to close at $51.31 due to research notes from Stifel Nicolaus, ahead of the company’s analyst day on Thursday.

Blackberry (BBRY) had its second catastrophic day in a row, down 4.56 percent to end at $14.23 as the much anticipated U.S. launch of the new Z10 continues to underwhelm.

Social media leader Facebook (FB) also ended the day at a loss of 2.33 percent, closing at $25.13 per share, after regulators announced a plan to compensate investors who lost money in last year’s IPO chaos.