Stocks fall amid Europe concern as Cyprus rejects bank levy

Uncertainty about the debt situation in Cyprus kept investors off balance Tuesday.

The Dow Jones Industrial Average snapped a two-session losing streak, up 3.76 points to 14,455.82. However, the Nasdaq Composite Index was down 8.49 points to 3,229.40 and the S&P 500 Stock Index slipped 3.76 points to 1,548.34.

After the close of trading it was reported the Cyprus parliament rejected a bailout package which included a controversial levy on bank deposits. The government will have to explore other options with the European Union's financial leaders making the situation uncertain.

Investors will now wait for the outcome of the two-day meeting of the Federal Reserve's open market committee. Chairman Ben Bernanke will discuss current financial conditions with reporters Wednesday afternoon after a statement from the committee is released.

Gold extended its winning streak to four sessions, up $6.70 to $1,611.30 an ounce. Oil, however, fell $1.58 to $82.16 a barrel.

“Obviously the situation in Europe is not what we want it to be,” John Manley, who helps oversee about $223.6 billion as chief equity strategist for Wells Fargo Advantage Funds in New York, said in a phone interview. “The next couple weeks will be more periods of chopping around. I don’t think it’s more than 2 to 4 percent in terms of risk on the market,” he said. “The housing market does seem to be on a bit more steady ground and that helps U.S. consumers.”

The S&P 500 rose earlier as a Commerce Department report showed builders broke ground on 917,000 homes at an annual rate, up 0.8 percent from a revised 910,000 pace in January that was higher than initially estimated. Building permits, a proxy for future construction, advanced 4.6 percent to 946,000, the strongest since June 2008.

The Federal Open Market Committee began a two-day meeting Tuesday. The policy makers agreed in December to link record-low interest rates to thresholds for unemployment and inflation so that investors and households know what conditions will prompt the Federal Reserve to consider raising rates.

The push by Fed Chairman Ben S. Bernanke to continue record stimulus faltered with the Jan. 3 release of minutes from the FOMC’s December meeting, which said several officials favored slowing or stopping bond buying well before the end of 2013.

“I don’t think there is any mystery at all,” Christopher Beck, senior vice president at Delaware Investments, said in a phone interview. His firm had more than $179 billion under management as of as of Dec. 31. “The Fed is not going to change the tone. They’re going to confirm the easing bias.”

Cliffs Natural Resources Inc. (NYSE: CLF), the biggest U.S. iron ore producer, tumbled 6.6 percent to $20.33. Goldman Sachs Group Inc. (NYSE: GS) trimmed its price forecast on the commodity, citing seaborne expansion projects and increasing production in China.

Chesapeake Energy Corp. (NYSE: CHK) slumped 5.1 percent to $21.04. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), the world’s second largest copper miner, slid 1.6 percent to $32.98.

Electronic Arts Inc. (Nasdaq: EA) dropped 8.3 percent to $17.15. The second- largest U.S. maker of video games said John Riccitiello is stepping down as chief executive officer and warned quarterly results may fall short of forecasts.

Juniper Networks Inc. (NYSE: JNPR) fell 5.3 percent to $19.14. Goldman Sachs downgraded the No. 2 maker of networking gear to sell from neutral, citing competition from Cisco Systems Inc. (Nasdaq: CSCO) and Alcatel- Lucent (NYSE: ALU).

Cardinal Health Inc. (NYSE: CAH) dropped 8.2 percent to $42.35 after saying its pharmaceutical distribution contract with Walgreen Co. (NYSE: WAG) won’t be renewed after it expires in August. Walgreen accounted for about 21 percent of Cardinal’s revenue in 2012.

Walgreen, the largest U.S. drugstore chain, and Alliance Boots GmbH agreed to a long-term partnership with AmerisourceBergen Corp. (NYSE: ABC), gaining the right to acquire a minority stake in the pharmaceutical services provider. Walgreen also reported second-quarter earnings that topped analysts’ estimates.