Category: Markets / Finance / March 18, 2013 5:40 PM EDT
Wall Street fell on Monday for a second consecutive session after a proposed bailout for Cyprus ignited fears that it could threaten the stability of banks in the Eurozone.
The controversial Cyprus bailout, that puts a levy on bank deposits, rattled the global financial markets. Early in the day, the Dow Jones industrial average tumbled more than 100 points to an intraday low of 14,404.21.The Dow Jones, Standard & Poor’s 500 index and Nasdaq Composite initially fell in early trade, however, stocks briefly rebounded in the afternoon.
Cyprus, now the fifth nation in the Eurozone to seek a bailout since the debt crisis began three years ago, has delayed voting on a plan to tax bank accounts to help pay for the country's bailout.
The Cypriot government and officials from the troika of lenders—the European Commission, the European Central Bank and the International Monetary Fund— are seeking ways to make a series of cuts to the size of a bailout package.
Under a plan backed by the Troika, Cyprus is proposing to levy a one-time tax on savers as part of a $13 billion bailout that would put the burden of rescuing the country on bank depositors, according to MoneyWatch.
The proposed plan is the first time during the Eurozone debt crisis that depositors in any member country have been required to take a cut on their bank holdings, MarketWatch reported.
The Dow Jones industrial average .DJI dropped 62.05 points, or 0.43 percent, to 14,452.06 at the close. The Standard & Poor's 500 Index .SPX slipped 8.60 points, or 0.55 percent, to 1,552.10. The Nasdaq Composite Index .IXIC fell 11.48 points, or 0.35 percent, to close at 3,237.59.
The Dow has gained around 10.3 percent for the year, while the S&P 500 is up 8.8 percent for 2013 and is currently on track to post its best quarter in a year.