Dow Records Slight Gain, Nasdaq And S&P Close Lower

The U.S. stock market was slightly lower on Tuesday as investors reacted to news that lawmakers in Cyprus have rejected a bailout plan which would include a tax on bank accounts in the country.

Investors are concerned that the banking crisis in Cyprus could trigger more problems in the euro zone, although the country only accounts for around 0.2 percent of the EU's economy. The turmoil in Cyprus, however, has caused the euro to trade through the $1.30 level to the downside with the EUR/USD last trading at $1.2875.

The developments in the island nation have also caused a significant two day rise in the CBOE Volatility Index (VIX), suggesting that market complacency could be coming to an end.

Major Averages
The Dow Jones Industrial Average added around 4 points, or 0.03 percent, to close just below 14,456.

The S&P 500 lost almost 4 points, or 0.24 percent, to 1,548.

The Nasdaq Composite shed around 8 points or 0.26 percent, to 3,229.

Housing Starts
Housing starts in the United States rose 0.8 percent for the month of February to 917,000 compared to a decline of 7.3 percent in January. This came in above consensus expectations which called for a rise to 911,000.

Housing starts have been in an uptrend since August 2011 and the most recent data shows that the market has finally stabilized with an upward trajectory.

Building Permits
Building permits were 946,000 in February, which was a 4.65 percent increase over a downwardly revised 904,000 in January. This easily topped consensus estimates which called for 925,000 building permits in February.

Commodities
Crude oil fell on Tuesday as investors are concerned about a potential re-flaring of the European sovereign debt crisis in the wake of the banking problems in Cyprus. Late in the day, NYMEX crude futures were down around 1.75 percent to $92.11. Brent futures were last down a little less than 2 percent to $107.53. Natural gas bucked the trend in the energy market, rising around 2 percent to $3.96.

Precious metals were mixed on the session with gold rising and silver falling slightly. At last check, COMEX gold futures were up 0.29 percent to $1,609.20. Silver was down 0.24 percent to $28.81. Copper was around 1 percent lower on the day to $3.3950.

In the agricultural complex, both corn and wheat rose better than 1 percent on the session while soybeans were slightly lower. In soft commodities, cocoa, sugar, orange juice, and cotton all climbed less than 1 percent, while coffee futures lost a little less than 1 percent.

Bonds
Near the close for equities, the iShares Barclays 20+ Year Treasury Bond ETF (TLT) was up around 0.71 percent to $117.49. Inflows into Treasuries sent yields lower on U.S. government debt.

Although the 2-Year Note was unchanged at 0.24 percent, the 5-Year yield fell three basis points to 0.78 percent. The yields on the 10-Year Note and 30-Year Bond both fell five basis points to 1.91 percent and 3.13 percent, respectively.

Currencies
The U.S. dollar was higher on Tuesday, which may have helped restrain risk appetite. The PowerShares DB US Dollar Index Bullish ETF (UUP), which tracks the performance of the greenback versus a basket of foreign currencies, had climbed 0.31 percent to $22.61 heading the equity close.

The closely watched EUR/USD pair was last trading down 0.54 percent to $1.2875. Other movers among currency pairs included the USD/JPY which fell 0.29 percent, and the USD/CAD, which added around 0.50 percent.

Volatility and Volume
The VIX jumped a little less than 8 percent to 14.37 on Tuesday after rising more than 20 percent on Monday. The spike in the VIX comes despite only moderate losses on the major averages at the beginning of the week.

Volume finally picked up on Tuesday as investors are getting more active in the wake of higher volatility. Around 156 million SPDR S&P 500 ETF (SPY) shares traded hands compared to a 3-month daily average of just over 130 million.

Stock Movers
Lululemon Athletica (LULU) fell almost 3 percent after the company recalled a new line of yoga pants. The stock, however, finished well off of its worst levels of the day.

Shares of Cardinal Health (CAH) fell around 8 percent on Tuesday after Walgreen Co. (WAG) and Alliance Boots GmbH reached an agreement to source branded and generic drugs from AmerisourceBergen (ABC). In return, the companies will have the right to buy a minority stake in the drug wholesaler. The deal hurts Cardinal Health which use to provide branded drugs to Walgreen.

In the wake of the news, Walgreen was trading up better than 5 percent while Amerisource Bergen shares added more than 3 percent, but fell on an intra-day basis after gapping sharply higher at the open.

Both the Federal National Mortgage Association (Fannie Mae) (OTC: FNMA) and the Federal Home Loan Mortgage Corp. (Freddie Mac) (OTC: FMCC) continued to rally on Tuesday after a sharp jump to start the trading week on Monday. Fannie Mae was last up better than 30 percent while Freddie Mac had climbed 29 percent.

NPS Pharmaceuticals (NPSP) climbed more than 9 percent after the company announced that it had revised its collaboration agreements with Takeda Pharmaceuticals. NPS will pay Takeda $50 million in stock for the full global rights to its drug Gattex.

Walter Investment Management (WAC) plunge on the session plummeted almost 21 percent after the company released its fiscal fourth-quarter earnings results.

DSW (DSW) lost more than 6 percent after the company's fiscal fourth-quarter earnings results.

Skullcandy (SKUL) added around 7 percent on the session after the company named Hoby Darling as its new president and CEO. Darling previously worked at Nike (NKE) as a digital executive.

Video-game publisher Electronic Arts (EA) fell more than 8 percent after the company's CEO John Riccitiello resigned. Electronic Arts also warned investors that its quarterly results would come in at or below the bottom end of its previous guidance range.

Affymax (AFFY) plunged more than 63 percent after the company said it will cut 75 percent of its workforce and potentially sell itself. Previously, Affymax recalled its antianemia drug following reports of severe allergic reactions in some kidney-disease patients, resulting in five deaths.

BY Scott Rubin