The Dow Jones Industrial Average (INDEXDJX:.DJI) is down after Cyprus secured a bailout over the weekend by agreeing downsize the country’s financial sector and penalize depositors with more than 100,000 euros in their accounts. As of 1:20 p.m. EDT, the Dow Jones Industrial Average (INDEXDJX:.DJI) is down 108 points, or 0.74%, to 14,404. The S&P 500 (INDEXSP:.INX)is down 0.6% to 1,548.
There were no U.S. economic releases today. Early this morning Cyprus agreed to a deal with the European Central Bank, the European Commission, and the International Monetary Fund wherein the three institutions would would give Cyprus a $10 billion euro bailout. In return, Cyprus agreed to restructure the country’s two largest banks and downsize the financial sector to a level in line with the EU average. The banks’ equity holders, bondholders, and bank accounts holding more than $100,000 euros will all take large hits. Deposits in Cypriot banks are insured to 100,000 euros, so bank accounts with less than 100,000 euros will not be hit.
Now investors are worrying about a spread of fear across the EU banking markets as people with large accounts in weak banks realize they could lose a significant amount of money if their banks ever went bankrupt. For more on the situation in Cyprus, Fool contributor John Maxfield took a look at “Why Cyprus Matters.”