Are Investors Still Unsure About Cyprus?
Index ETFs finished mixed-to-flat on Wednesday as investors anticipate Cypriot banks re-opening on Thursday
Index ETFs finished flat to mixed on Wednesday despite an early morning downturn in trading. The SPDR S&P 500 ETF (NYSEARCA:SPY) lost 0.09 percent, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost 0.22 percent, the NASDAQ ETF (NASDAQ:QQQ) gained 0.13 percent, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) added 0.07 percent.
Index ETFs likely finished mixed and flat because investors are anticipating the re-opening of Cypriot banks, an event that many predict will trigger bank runs. Although Cyprus has implemented capital controls on the banks, there are worries across the EU about the notion that other countries may implement the “deposit levy” to relieve future debt crises.
With the Cyprus debt crisis solution now the “model” for the rest of the EU, there are fears of large sums of money being withdrawn from the system, which could be catastrophic. At any rate, the Cyprus crisis has been resolved for now, although it brought with it a whole slew of bad new questions, all of which investors are not satisfied with…
In the economic report realm, Wednesday’s lackluster Pending Homesales Report likely did not help the flat markets go up any higher. According to the National Association of Realtors, pending home sale prices declined 0.4 percent for the month of February. However, Tuesday’s economic reports had a stellar performance.
Bottom Line: Keep in mind that all of this nonsense in Cyprus and Wednesday’s lackluster economic reports have barely kept the S&P 500 from etching out an all new, all-time high record. It appears that investors are confused, at the very least, about how all of this will resolve, especially since the Cyprus crisis did not turn into a global meltdown. The real question is, what event will trigger a collapse, because this EU dilemma is far from fixed.
John Nyaradi is the author of The ETF Investing Premium Newsletter.