Stocks Slump as U.S. and Eurozone Uncertainties Fester

Tickers in this article: KCG AZO ^DJI PBY GERN ^GSPC WYNN IACI LVS ^IXIC TOL BIG NOK

NEW YORK ( TheStreet) -- Major U.S. stock averages slumped Tuesday as eurozone troubles continued to fester amid a finance ministers meeting and signs of gridlock in the U.S. "fiscal cliff" talks.

The Dow Jones Industrial Average dropped 14 points, or 0.11%, to 12,952. The blue-chip index had started the session up 6.2% this year.

Breadth was slightly negative, with losers outnumbering winners 16 to 14. The biggest blue-chip decliners were Home Depot (HD) , AT&T (T) , Verizon (VZ) and Chevron (CVX) .

Top gainers included Hewlett-Packard (HPQ) , Intel (INTC) and Wal-Mart (WMT) .

The S&P 500 closed down 2 points, or 0.17%, at 1,407. The Nasdaq was lost 6 points, or 0.18%, to 2,997.

The stronger sectors in the broad market were transportation, health care, energy and conglomerates. The weaker sectors included technology, services, financials and consumer cyclicals.

Decliners were outpacing advancers incrementally on the New York Stock Exchange and by a 1.1-to-1 ratio on the Nasdaq. Volumes totaled 3.20 billion shares on the Big Board and 1.76 billion on the Nasdaq.

"Despite all the valid concerns over the fiscal cliff, the recent 9% sell-off has set the market up for the traditional seasonal year-end rally, and possibly carrying over in to a January Effect rally," said Mary Ann Bartels, head of U.S. technical analysis at Bank of America. "Our Volume Intensity Model has moved positive and the weekly price momentum stochastic model has given an oversold buy reading similar to June '12 and July/Sept '11."

" The market has regained the 200-day moving average and the 1,405 level. The next big hurdle is 1435," she said. "Above this level would refresh the potential for a sustained rally to target a move toward 1,450-1,500. Important support to hold is the 200-dma at 1384.74. However, 2013 is setting up to be volatile, in our view, as the negative divergences are still in place with market breadth and transports not confirming the September highs."

In one of the latest developments in the U.S. budget negotiations, the White House rejected a counteroffer by Republicans Monday on tax and spending cut proposals, explaining that it would not fulfill President Barack Obama's promise to increase tax rates on the richest Americans.

"In recent years, negotiations over fiscal policy have followed a familiar pattern," said Jeremy Lawson, senior economist at BNP Paribas. "Phase 1 (the honeymoon) involves Democrats and Republicans making soothing noises about the importance of working together and expressing guarded optimism about getting a deal done. This quickly gives way to Phase 2 (the confrontation), during which both parties' rhetoric hardens as they play to their bases and seek to gain the upper hand in the court of public opinion. Phase 3 (the bargain) only begins at the 11th hour when the two sides take negotiations more seriously as they try to avoid an outcome that neither party really wants."

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