Stocks reversed an early rise on Wall Street on Monday as traders returned to worrying about the European economy.
Optimism about a deal to prevent financial collapse in Cyprus had briefly pushed the Standard & Poor’s 500 index to within a quarter-point of its record closing high, but stocks soon turned negative.
The S&P 500 closed down 5.20 points at 1,551.69. The loss was offset in part by big jumps for Apollo Group Inc. and McGraw-Hill Cos. Computer maker Dell Inc. also supported the index as a bidding war broke out among investors who want to take the company private.
The Dow Jones industrial average fell 64.28 points to 14,447.75. The Nasdaq dropped 9.70 to 3,235.30.
Declining stocks led advancing ones on the New York Stock Exchange, with decliners totaling 1,782 and advancers totaling 1,221. Consolidated volume was 3.1 billion shares.
Stocks turned negative about an hour into the trading day Monday as the initial euphoria about Cyprus’ deal to secure $13 billion in emergency funding was overshadowed by renewed concerns about the European economy.
The fear intensified after a top European official indicated that investors in struggling banks may be forced to take losses - an element of the Cyprus agreement that had previously been seen as unique to that country.
All ten industry groups in the S&P 500 closed lower, with industrial and materials companies posting the biggest losses. Network technology company VMware Inc. dove after the website Business Insider reported that PayPal and eBay will remove its software from 80,000 servers. The stock fell $3.65, or 4.6 percent, to $76.50.
Among the biggest drags on the S&P 500 index were software maker Red Hat Inc., online marketplace eBay Inc. and Textron Inc., an aerospace and defense contractor.
Europe still needs a long term economic fix, said David Kelly, chief global strategist at J.P. Morgan Funds. Business activity in the 17 nations using the euro has declined continually since September 2011, according to research by Markit, a data provider. The region’s economy shrank 0.6 percent in 2012, according official government statistics.
Concern about Cyprus last week pushed U.S. stock indexes to only their second weekly loss this year. Investors watched closely as the small, Mediterranean island scrambled to satisfy its lenders and prevent its banks from collapsing.
Traders expect more turbulence from Europe before the crisis has been resolved, said Anthony Conroy, head trader at ConvergEx Group, which provides technology to support big traders like investment advisers and hedge funds. Given the uncertainty, it’s not surprising that stocks would veer between positive and negative, he said.
“When you have concern, you have volatility, and you’re seeing volatility in here,” Conroy said.
As the final week of trading this quarter kicks off, the indexes are holding onto most of the gains built during the long rally earlier this month. The Dow is up 10 percent, the S&P 500 nearly nine percent.
Conroy expects stocks to maintain their recent gains as short-term dips draw more traders into the market. Kelly agreed, noting that stocks typically decline in the last week of a strong quarter, as investors seek to lock in their gains.
Apollo Group shares made a big move Monday after the for-profit education company said its quarterly net income exceeded Wall Street’s expectations. The stock rose $1.21, or 7.1 percent, to $18.25.
Business, Pages 24 on 03/26/2013