Stock markets have gone on a wild ride today, with the Dow Jones Industrial Average (DJINDICES:^DJI) swinging 132 points from this morning's peak to a midday low. The Dow has since leveled off, down a fraction of a point as of 3:20 p.m. EDT, while the S&P 500 (SNPINDEX:^GSPC) remains down 0.42%.
The most recent news about the bailout in Cyprus is that the government rejected a tax on bank deposits, which puts the entire bailout into question. The country's banks are closed until Thursday, so there's still time to resolve the issue, but we shouldn't be shocked if there's a run on the banks in the event a deposit tax isn't implemented by then.
Caterpillar (NYSE:CAT) and Alcoa (NYSE:AA) are leading the decliners on the Dow, falling 1.6% and 1.3%, respectively. These two infrastructure companies could be adversely affected if the problems in Cyprus spread to the broader European economy. Spain, Greece, and Italy are still dealing with their own financial problems, and if Cyprus rejects a bailout or the deposit tax is met with fear by investors and depositors (which is likely), it could put their situations into question. Cyprus won't bring the European Union down, but a larger country could, and that would be terrible for companies that need a healthy economy to drive demand.
When there's fear about the overall economy, investors flee to consumer staples. That's driving Coca-Cola (NYSE:KO) and Procter & Gamble 1.5% and 1.2% higher, respectively, late in the trading session. There's nothing specific driving these stocks besides a flight to high-quality names. Coca-Cola, in particular, has weathered many economic storms, so a little trouble in Cyprus is old hat for the soda giant.