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Midday Market Update

Stocks Lower on Cyprus Worries

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U.S. Market    
Stocks were lower this morning as European worries resurfaced.

The European Central Bank said today that it would cut off emergency funding to Cyprus on Monday if the country can’t reach a bailout agreement with the European Union and the International Monetary Fund by then. Cyprus rejected an agreement earlier this week over concerns about a hefty tax on bank deposits.  Cyprus has said its banks would likely fail without ECB funding. The collapse of the island nation’s financial system could lead to Cyprus’ exit from the eurozone.

Initial unemployment claims rose by 2,000 to 336,000 last week. The less volatile four-week moving average dropped 7,500 to 339,750, the lowest level since February 2008.

Home prices rose 0.6% in January from the previous month according to the FHFA. Prices are up 6.5% from January 2012. The data underscores the continuing improvement in the housing market.

The Markit flash purchasing manager index rose slightly in March from February levels.  The reading of 54.9 implies that manufacturing activity in the month is expanding at roughly the same rate it was in February.

At midday the Dow, S&P 500 and Nasdaq were down 0.2%, 0.3% and 0.6% respectively.

Stocks on the Move
 Oracle (ORCL) reported financial results for its fiscal third quarter,  revealing surprising weakness in new software license revenue and larger-than-expected declines in hardware revenue.  Shares fell over 8% on the report. On the software side, revenue from new licenses fell 1.8% versus last year, while software update and support revenue grew 7.1%. Hardware revenue fell 16%.

Energy Transfer  announced this morning that  Energy Transfer Partners (ETP) would acquire  Energy Transfer Equity's (ETE) 60% interest in Holdco, an entity the two partnerships established to hold assets from last year's Southern Union and Sunoco acquisitions. Under the terms of the deal, ETP will give ETE $1.4 billion in cash and $2.3 billion in new ETP units for its Holdco interests. ETE has agreed to forgo incentive distributions on units for the next two years and receive only 50% of its incentive distributions for the following two years.

Foreign Markets
European shares fell as Cyprus fears continue to dominate. In late trading, the FTSE 100, Germany’s DAX and Paris CAC were down 0.7%, 0.9% and 1.3% respectively.

Asian markets were mixed on the day. The Shanghai Composite was up 0.3%, the Nikkei 225 was 1.3% higher while the Hang Seng was down 0.1%.

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