The U.S. stock market posted its biggest loss in weeks on Monday and the CBOE Volatility Index jumped 20 percent after euro zone policy makers announced a $13 billion bailout of Cyprus.
Despite the concerns, the market decline in the United States was contained. The bailout comes with particularly controversial terms, with Cypriot bank accounts being forced to pay a tax. Cyprus banks are also expected to remain closed until Wednesday, a move that is aimed at preventing a bank run in the country.
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The news sent the euro falling sharply against the greenback as investors worried that the Cyprus bailout could effect the finances of other EU countries. With Cypriot depositors being on the hook for some of the bailout funds, fears arose that depositors in other struggling countries such as Spain or Italy may yank their money from banks.
The Dow Jones Industrial Average lost around 62 points, or 0.42 percent, to 14,452.
The S&P 500 fell almost 9 points, or 0.55 percent, to 1,552.
The Nasdaq Composite lost around 11 points, or 0.35 percent, to 3,238.
Crude oil futures were mixed late on Monday. At last check, NYMEX crude futures were higher by 0.28 percent to $93.70. Brent crude futures had fallen 0.40 percent and were last trading at $109.37. Natural gas was slightly lower on the session to $3.87.
Near the close of equities, COMEX gold futures had climbed 0.69 percent to $1,603.60. Silver had added 0.07 percent and was last trading at $28.87. Copper futures fell sharply and were last down almost 3 percent.
Most of the grains traded lower on Monday, but corn futures added 0.42 percent. Wheat was last down 1.42 percent. In soft commodities, major movers included coffee which lost more than 2 percent and sugar which was down more than 3 percent.
Late in the equity trading session, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was up around 0.69 percent to $116.55. The jump in bond prices sent yields lower on the day.
The yield on the 2-Year Note fell one basis point to 0.24 percent while the yield on the 5-Year Note lost three basis points to 0.81 percent. The yields on the 10-Year Note and 30-Year Bond fell four and three basis points to 1.95 percent and 3.18 percent, respectively.
The U.S. dollar rose on Monday, limiting risk appetite. The PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback, was last trading up 0.67 percent to $22.55.
The euro traded down sharply on the day with the EUR/USD pair last down 0.83 percent to $1.2947. The losses in the euro came on the back of a euro zone decision to fund a bailout of Cyprus.
Volatility and Volume
The VIX surged on concerns over the Cyprus bailout. The widely watched measure of volatility expectations jumped better than 20 percent to 13.59.
Volume picked up on Monday, but was still below the average. Around 110 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands on the day versus a 3-month daily average of 131.4 million.
Shares of struggling retailer J.C. Penney (NYSE:JCP) jumped almost 7 percent on Monday after ISI said that the company could solve many of its problems by becoming a REIT.
ValueClick (NASDAQ:VLCK) surged better than 8 percent on the session after Jefferies raised its rating to Buy with a $35 price target on the stock.
Advent Software (NASDAQ:ADVS) fell around 5 percent after the company said that it would remain independent. Previously, Advent had been mulling a sale.
Bill Barrett (NYSE:BBG) climbed better than 5 percent after the company moved to allow some institutional investors to hold up to 20 percent of its stock, up from 15 percent previously.
Tiny EDAC Technologies (NASDAQ:EDAC) climbed better than 7 percent on the session after agreeing to be acquired by private equity firm Greenbriar Equity Group in a deal valued at around $104.1 million.
Entropic Communications (NASDAQ:ENTR) lost better than 8 percent after the company guided for first-quarter results below prior expectations.
Intuitive Surgical (NASDAQ:ISRG) was trading up almost 6 percent near the close after the stock was upgraded to Buy at Canaccord.
Morgan's Hotel Group (NASDAQ:MHGC) rose more than 10 percent after its largest shareholder, OTK Associates LLC, said that it intends to nominate a slate of candidate's to the company's board of directors.
Glu Mobile (NASDAQ:GLUU) was trading up around 8 percent near the close as investors continue to pile into the stock after the company launched a real money gambling platform last week.
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