Wall Street Takes Cyprus Issue Seriously

Wall Street stocks seesawed on Tuesday before ending mixed after Cyprus legislators rejected a tax on savings to help pay for a bank bailout.

The Standard & Poor’s 500-stock index fell 0.2 percent by the close of trading, and the Nasdaq composite index dropped 0.3 percent, while the Dow Jones industrial average gained 3 points.

Investors took advantage of the unease in Europe to cash in some recent gains.

“The market is not acting as if there is a reason to panic, but it is another thing people need to look at,” Doreen Mogavero, chief executive of Mogavero, Lee & Co., said about Cyprus from the floor of the New York Stock Exchange. “It’s enough reason to be cautious.”

The overhanging concern was that account holders in other parts of Europe could make a run on their banks on concerns they will also be taxed to help their struggling economies, although no sign of a bank run or any proposal to tax accounts outside Cyprus appeared.

European bank shares extended their decline on Monday, as the sector’s index fell 2.2 percent. Market indexes overall were down from 0.3 percent to 2.2 percent in Europe.

In the United States, data showed housing starts rose in February and new permits for construction rose to their highest level since 2008.

“The data was good, but at the same time we need to think about, now that the housing market is getting better, will the Fed have to wait longer to get their foot off the gas pedal?” said Joe Saluzzi, co-head of trading at Themis Trading.

Among individual stocks, shares of Citigroup — which agreed on Monday to pay $730 million to settle a class-action lawsuit on behalf of investors who said they were misled by the company’s disclosures — were down 1 percent.

The drug maker Affymax said it was considering selling itself or filing for bankruptcy protection among a range of alternatives, as it struggled to stay afloat after the recent recall of its sole commercial product, the anemia drug Omontys. The stock plunged 63 percent.