Next up, Spain and Cyprus. It seems every day brings a new batch of Euro woes. Today, the result was a tanking S&P 500 (INDEX: ^GSPC ) , which was down 1.60% at market's close.
Spain's request for a $77 billion bailout came as little surprise for investors, as the European Central Bank had already offered the faltering nation a $125 billion bailout for Spanish banks if needed. Cyprus' application for a bailout came somewhat more abruptly, although the tiny island nation's exposure to Greece shouldn't render the news too shocking. The communist Cypriot government, fearing the austerity measures likely to be attached to EU funding, had also investigated the possibility of receiving a loan from China or Russia, although the pressured financial sector of Cyprus couldn't wait. Declining markets indicate that investors are not optimistic about the two-day European Union summit set to begin on Thursday. Combined with continually rising bond yields, the potpourri of European economic woes paints a pessimistic picture for investors everywhere.
Yet as investors around the world grow fearful, it might be exactly the right time to become greedy, according to a certain Mr. Buffett of Omaha, Neb. On Thursday, the Supreme Court will announce its decision regarding the constitutionality of the Patient Protection and Affordable Care Act. The decision will produce winners and losers, with some companies poised to profit from a repeal of Obamacare, as discussed in Sean Williams' recent article. Analyst Charles Nenner, the market cycle specialist who predicted the S&P's crash last March, believes stocks may be near bottoming out and worth scooping up at a discount now. With these hopeful signs, now might be the right time to invest in a declining market.
S&P in focus
Bank stocks tumbled hard, perhaps as a delayed reaction to Moody's downgrades or hung over after rallying Friday. Bank of America (NYSE: BAC ) , Morgan Stanley, and Citigroup were all down more than 4%, while JPMorgan Chase was down 1.92%
Tech stocks also suffered, as 41% of companies in the sector lost more than 2% on the day. Microsoft (Nasdaq: MSFT ) agreed to purchase corporate social-network firm Yammer for $1.2 billion. The acquisition, as well as the company's announcement that it has no plans to upgrade current phones to Windows 8, sent shares plunging by 2.72% on the day. Dell raised its bid to buy out Quest Software (Nasdaq: QSFT ) to $2.32 billion, or $27.50 per share, resulting in a 5.45% increase for Quest, although Dell posted a 2.05% loss.
Cigarette company Phillip Morris International (NYSE: PM ) dropped 1.47% after lowering its full-year earnings forecast last week, citing economic problems in Southern Europe as cause for declining European sales. To stave off smoking's deteriorating popularity, Phillip Morris has plans to introduce a new line of innovative cigarette products, many of which are supposed to reduce health consequences but also target younger smokers.
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