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The blue chips took their biggest fall of 2012 as traders watched a crucial debt deal in Greece that seemed secure just a day earlier fall victim to political uncertainty and responded to disappointing economic data from the U.S.

Today’s Markets

The Dow Jones Industrial Average fell 89.2 points, or 0.69%, to 12801, the S&P 500 slid 9.3 points, or 0.69%, to 1343 and the Nasdaq Composite dropped 23.4 points, or 0.8%, to 2904.

Despite the weak performance on the day, Wall Street only posted mild losses for the week. The Dow fell 0.5%, while the broader S&P 500 only ticked lower by 0.2%. The Dow managed to post a major comeback on the day, having fallen 146.9 points at session lows.

Materials and energy shares led the charge lower. Indeed, aluminum giant Alcoa (AA: 10.29, -0.35, -3.29%) and oil behemoth ExxonMobil (XOM: 83.80, -1.08, -1.27%) were among the worst-performing blue chips. Industrial and financial shares took a hit too, with big banks like Bank of America (BAC: 8.07, -0.11, -1.34%) and Morgan Stanley (MS: 19.66, -0.68, -3.34%) sustaining heavy losses.

Traders were bidding up U.S. Treasury bonds, seen as a safe-haven asset during tumultuous times. The yield on the benchmark 10-year note fell 7.5-basis points to 1.964%. Meanwhile, volatility jolted 11.3% higher, as tracked by the CBOE’s VIX.

Greek Deal Hits a Roadblock

Greece’s main political parties agreed on Thursday to a package of highly unpopular austerity measures aimed at cutting down the embattled country’s public debt level. The deal was a key demand of the European Union and International Monetary Fund, both of which pledged in October to provide Greece with a $172 billion bailout.

Greece needs the first tranche of rescue aid by March 20 to avoid a disorderly default that could hammer European financial markets. However, eurozone finance ministers meeting in Brussels late Thursday said they would not sign off on the bailout until next Wednesday, and only under the conditions that Greece’s parliament votes for the austerity package and political leaders of the three main parties agree to it in writing.

“In short: no disbursement without implementation,” Luxembourg Prime Minister Jean-Claude Juncker who also heads the so-called Eurogroup said.

Read more: http://www.foxbusiness.com/markets/2012/02/10/greek-uncertainty-slams-wall-street/?cmpid=partner_aol#ixzz1m3gQD8z6

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