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Midday Market Update

Stocks Mostly Lower on Cyprus Concerns

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U.S. Market    
Investors worldwide showed caution Monday, selling stocks and moving into safer assets, following news over the weekend of a bailout in Cyprus. However, U.S. indexes were cutting earlier losses at midday. 

The European Commission, European Central Bank, and International Monetary Fund approved a EUR 10 billion bailout of Cyprus this weekend, pending Cypriot parliamentary approval. However, the financial-rescue plan included the condition that the country sets a levy on bank deposits in order to help fund its own bailout. This sparked concerns that similar conditions might be mandated in other eurozone countries in need of financial assistance, and in turn, created fears of a broad run on banks in Western Europe. 

Separately, the National Association of Home Builders said that its March housing-market index fell to 44, two points lower than February's tally. The most recent index also moved opposite the expected March reading of 48. Although some prospective home buyers have shown optimism recently, the NAHB survey showed that builders have concerns about adequate land supply as well as materials. 

The Dow was flat at midday, but the S&P 500 and the Nasdaq were 0.2% and 0.1% lower. 

Stocks on the Move
 Qualcomm (QCOM) shares took back earlier losses but were still 0.5% lower at midday following news that the firm is delaying an investment in Japanese electronics firm, Sharp. 

 Dow Chemical (DOW) shares had fallen by 1.2% at midday after the firm announced it had entered a joint venture with multiple Japanese companies in order to improve its performance plastics business. 

In an effort to obtain final shareholder approval for a merger with  Deutsche Telekom (DTEGY) division T-Mobile USA,  MetroPCS Communications (PCS) argued Monday morning that the potential merger would be much more beneficial to owners of its shares. However, the firm is receiving opposition from several hedge funds that say the deal would create a new company with too much debt. Deutsche Telekom shares were 1.8% lower at midday, while MetroPCS shares were down 0.8%. 

Foreign Markets
Global markets were all lower Monday on the Cyprus bailout concerns. The Shanghai Composite fell by 1.7%, and the Hang Seng lost 2.0%. The Nikkei 225 was 2.7% lower. 

In Europe, the FTSE 100 was down by 0.4%, and the Paris CAC had lost 0.5%. The DAX was 0.6% lower. 

Kevin O'Shaughnessy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.