NEW YORK – The latest twists in Europe’s debt drama weighed down the stock market Tuesday, offsetting more good news on the U.S. housing market.
On Tuesday, the Dow rose 3.76 points, or 0.03 percent, to close at 14,455.82. The Standard & Poor’s 500 fell 3.76 points, or 0.2 percent, to 1,548.34. The Nasdaq composite fell 8.50 points, or 0.3 percent, to 3,229.10.
Investors were focused on Cyprus, where the Mediterranean country’s lawmakers vote against a proposed bailout plan for banks that would have called for raiding the savings accounts of ordinary citizens, setting a precedent in Europe’s ongoing debt crisis. The vote happened 90 minutes before U.S. markets closed, at 2:30 p.m. Eastern time.
The plan was rejected – with zero votes in favor – even after being changed to lessen the burden on savers with lower balances. The vote leaves Cyprus’s bailout from international lenders in question. Cyprus is seeking $15.8 billion to fund its government and its banks. Without the money, both could collapse, and the country could wind up leaving the union of 17 countries that use the euro.
“The concern in the market is that they could default or they could be forced out of the euro zone, and that would create a precedent,” said Alec Young, a global equity strategist with S&P Capital IQ. “The selling, though, is fairly contained, and that tells you most people think there will be some kind of compromise reached.”
The Dow and other U.S. indexes started higher following a report of a surprisingly large increase in home construction in February. The index gained as much as 62 points in morning trading before falling as the debate in the Cyprus parliament cast gloom on the street.