* Top official says Cyprus deal is template for euro zone
* Stocks wipe out gains after initial optimism over Cyprus
* Dell says two new proposals could be superior to
* Apollo Group rallies after results beats estimates
* Indexes down: Dow 0.5 pct, S&P 0.4 pct, Nasdaq 0.4 pct
By Ryan Vlastelica
NEW YORK, March 25 After gaining early on
Cyprus's bailout, U.S. stocks fell on Monday on a top euro zone
official's comments that Cyprus was a template for handling the
region's other debt-strapped countries.
Investors grew cautious after Jeroen Dijsselbloem, who heads
the Eurogroup of euro zone finance ministers, told Reuters and
the Financial Times that when failing banks need rescuing, euro
zone officials would turn to the bank's shareholders,
bondholders and uninsured depositors to contribute to its
Such an approach would be a radical departure for euro zone
policy after three years of crisis in which taxpayers across the
region have effectively been on the hook for resolving problem
banks and indebted governments.
"The fire in Europe hasn't been completely put out, though
it has been tapered," said John Carey, portfolio manager at
Pioneer Investment Management in Boston.
"There would be some unease if these problems persisted or
got out of control."
Relief that Cyprus had reached a deal to avoid financial
meltdown quickly reversed to drive safe-haven German Bunds
higher and put peripheral bonds, including those of Spain and
Italy, under pressure after Dijsselbloem's
In the 10 billion euro deal between Cyprus and the European
Union, the European Central Bank and the International Monetary
Fund the country's second-largest bank would be wound down and
deposits below 100,000 euros shifted to the Bank of Cyprus to
create a "good bank."
Deposits above 100,000 euros, which are uninsured, will be
frozen and used to resolve debts and recapitalize the Bank of
Banking shares were among the ones hurt most by the
Dijsselbloem comments. Shares of Morgan Stanley fell 1.4
percent to $21.88 while Bank of America dropped 1.2
percent to $12.41.
The Dow Jones industrial average was down 71.57
points, or 0.49 percent, at 14,440.46. The Standard & Poor's 500
Index was down 5.50 points, or 0.35 percent, at 1,551.39.
The Nasdaq Composite Index was down 12.60 points, or
0.39 percent, at 3,232.40.
At its session high, the Dow climbed above 14,547, its
highest ever, while the S&P was within one point of its closing
record of 1,565.15 set in October 2007.
In company news, Red Hat Inc fell 4.5 percent to
$48.50 after Jefferies cut its price target on the stock.
United Therapeutics Corp dropped 1.4 percent to
$60.05 after it said the Food and Drug Administration had
rejected its oral drug to treat hypertension for a second time.
Dell Inc said it received alternative proposals
from Blackstone and billionaire investor Carl Icahn that
could be superior to the $24.4 billion offer from founder
Michael Dell and private equity fund Silver Lake Partners last
month. Dell shares rose 3.1 percent to $14.58.
Merger and acquisition activity has been another of the
reasons for the stellar performance of stocks so far this year.
University of Phoenix owner Apollo Group rose 9.8
percent to $18.71 after it reported a better-than-expected
profit even as student sign-ups fell for the fourth straight
quarter. The stock was the biggest percentage gainer on the S&P
Best Buy Co Inc rose 2.1 percent to $23.26 after the
company said that founder Richard Schulze would rejoin the
retailer as chairman emeritus and add two of his former
colleagues to the board. The news helped dispel rumors the
largest investor in the world's largest consumer electronics
chain was contemplating selling his stake in the company.