U.S. stocks rebounded from early declines to close little changed on Wednesday, but investors were still worried about the chance of a run on Cypriot banks and its possible implications for other euro-zone lenders.
Financial shares fell on both sides of the Atlantic on concerns that depositors at banks in other euro-zone countries will withdraw large amounts of money. Investors are worried that the Cyprus bailout would become a template for solving banking crises in the region.
The S&P 500 fell 0.8 per cent in morning trading, but in line with recent market behavior, investors took the drop as a buying opportunity. By the close, late buying had helped the S&P 500 cut most of the session's losses to end down less than a point.
The benchmark S&P 500 has traded within 10 points of its record closing high for 13 consecutive days, without once moving above the 1,565.15 level set October 9, 2007. It is on track to post its fifth consecutive month of gains.
"Any time you have a run like we've had, market participants will look for a reason to take profits," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
"But pauses in this uptrend have been short and shallow. Everybody seems to want to buy in the slightest pullback."
The KBW bank index fell 0.6 per cent and a gauge of European banks' stocks dropped 0.5 per cent. The PHLX Europe sector index declined 1.1 per cent.
Cypriot banks are due to reopen on Thursday while limiting withdrawals, banning checks and curbing the use of Cypriot credit cards abroad, after being closed for almost two weeks. Uninsured deposits in Cyprus are expected to be reduced as part of the rescue deal.
The Dow Jones industrial average fell 33.49 points or 0.23 per cent, to 14,526.16 at the close. The S&P 500 lost just 0.92 of a point, or 0.06 per cent, to finish at 1,562.85. The Nasdaq Composite added 4.04 points or 0.12 per cent, to close at 3,256.52.
Cliffs Natural Resources shares hit a four-year low of $17.95 after Morgan Stanley downgraded the miner's stock and Credit Suisse slashed its price target, citing difficulties from a surplus of iron ore pellets in the Great Lakes region.
Cliffs Natural Resources shares closed at $18.46, off 13.9 per cent.
Gilead Sciences ended at a record high at $47.72, up 4.3 per cent, after earlier reaching a lifetime intraday high at $47.83. Gilead's advance buoyed the Nasdaq Composite and helped the S&P 500 healthcare sector index rise 0.5 per cent as the best performer of the day.
Data showed contracts to buy previously owned U.S. homes fell in February, held back by a shortage of properties, but there was little to suggest that the housing market recovery was stalling.
The PHLX housing sector index edged up 0.12 per cent.
Volume was light, with some market participants out for the observance of Passover.
About 5.1 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, one of the lowest volume levels so far this year, and far below the daily average so far this year of about 6.4 billion shares.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 8 to 7. On the Nasdaq, about 13 stocks fell for every 12 that rose.
Copyright @ Thomson Reuters 2013
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