Why the Dow Gave Back Its Cyprus Gains

New investors are consistently surprised when long-hoped-for good news fails to produce a lasting jump in the stock market. This morning, U.S. investors woke up to news of a last-minute deal in Cyprus to avoid a banking collapse, with Cypriot leaders agreeing with the European Union, European Central Bank, and International Monetary Fund upon a "good-bank/bad-bank" scenario that will largely protect small depositors. Yet the relief rally proved short-lived, as plenty of other uncertainties will persist well into the future. By 10:50 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) had given back its earlier 50-point gains and was actually down 31 points. The broader market did a little better, but the S&P 500 failed to answer the challenge, falling short of its own record highs.

But that didn't stop some stocks from posting more sizable gains. Among the best performers in the Dow was Home Depot (NYSE: HD  ) , which rose 0.5%. Despite ups and downs in overall sentiment about the global economy, the one constant lately has been the housing industry's steepening path to a full recovery. Home Depot is best poised to take full advantage of that trend, having jumped to all-time highs on the strength of its popularity among homeowners and residential contractors alike.

Outside the Dow, Apollo Group (NASDAQ: APOL  ) soared more than 8% after announcing earnings. The for-profit education company that runs the University of Phoenix saw net income plunge nearly 80% from the year-ago quarter on a 13% drop in revenue, but even those ugly results were better than what analysts had expected. Yet given declining enrollment and the need for increased spending to bring students to class, Apollo could see more contraction in the future before things turn around.

Finally, VirnetX (NYSEMKT: VHC  ) fell another 11.7% this morning, adding to massive losses from earlier this month after the company lost its patent infringement lawsuit against Cisco Systems (NASDAQ: CSCO  ) . VirnetX had won similar cases against tech companies in the past, leading to high expectations that it would beat Cisco, but the unexpected loss has created a crisis of confidence in the stock. Unless VirnetX can demonstrate its ability to bounce back and move forward from the bad news, investors may well choose to continue fleeing the stock.

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  • Report this Comment On March 25, 2013, at 11:23 AM, Johncarringer wrote:

    So why did the Dow give back its gains? "Plenty of other uncertainties" is too vague! There are always plenty of uncertainties.

  • Report this Comment On March 25, 2013, at 11:23 AM, gbad00 wrote:

    The title suggested an answer. None was provided. No ideas. Nothing. What are the "plenty of other uncertainties" alluded to? The "Fool" has become the "fool", willing to fill up its day with contentless content.

  • Report this Comment On March 25, 2013, at 11:53 AM, MoMoss wrote:

    The real answer is idiotic comments out of the Dutch finance minister.

  • Report this Comment On March 25, 2013, at 1:33 PM, double0zero wrote:

    The PENETRATING FEAR that Cyprus is the trial case for the larger countries down the road that will need further bailouts. Cyprus has several options available now: 1). Acquiese by paying the levy on the banked assets and then persevere with the hardships of the austerities that will come from accepting these terms, 2). rebel with riots causing physicial damage in the streets, forcing out the authorities, and replacing them with another group of would be members of a ruling class who are willing to withdraw the country from the EU, resetablish a cypriot currency and pay back debts with this newly reinstated cypriot currency, 3). Civil War 4). Invite in a monied Third power who will for payment of the debt will be happy with a portion of the leadership.

  • Report this Comment On March 25, 2013, at 2:36 PM, pauldeba wrote:

    Momoss is right. the eurogroup president said they had a template now ( ie stealing people's money) and I guess the market doesn't like when politicians think stealing money is a great idea rather than a last resort

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