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US STOCKS-Wall St off as Slovak vote on rescue plan awaited

Published 10/11/2011, 09:56 AM
Updated 10/11/2011, 10:00 AM
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* Alcoa to kick off earnings season after market close

* Slovak parliament to vote on euro zone rescue fund

* Indexes: Dow, S&P off 0.2 pct, Nasdaq up 0.1 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to early morning trading)

By Chuck Mikolajczak

NEW YORK, Oct 11 (Reuters) - U.S. stocks were off on Tuesday, pulling back from sharp gains in the prior session as investors awaited the results of a key vote by Slovakia on expanding the euro zone rescue fund.

With all the other member states having ratified a pact to boost the size and powers of the European Financial Stability Facility bailout fund, all eyes turned to Slovakia.

Slovakia is likely to approve a plan this week to strengthen the rescue fund despite opposition from a junior coalition party that was abstaining from a vote on Tuesday. For details, see [ID:nP7E7LA003]

U.S. stocks jumped 3 percent on Monday after a pledge by German and French leaders to come up with a program to tackle the debt crisis, lifting the S&P 500 above its 50-day moving average for the first time since late July, a bullish technical signal.

"We had a good day yesterday, a lot of sectors participated. The only thing was that it was on light volume and yesterday was Columbus Day ... The better indication if the action is real or if is going to hold is what does the market do today. How are those (sector) leaders going to react?" said Sam Ginzburg, head of capital markets at First New York in New York.

"I have not seen yet a tremendous amount of long-only participation in this. It's mostly hedge fund to hedge fund pinging stocks back and forth. I haven't seen the commitment from the 'long onlys' in there from where I sit right now, that they are in there buying in any kind of big way." [ID:nL5E7LB0V9]

The Dow Jones industrial average <.DJI> dropped 20.85 points, or 0.18 percent, to 11,412.33. The Standard & Poor's 500 Index <.SPX> shed 2.33 points, or 0.19 percent, to 1,192.56. The Nasdaq Composite Index <.IXIC> gained 2.15 points, or 0.08 percent, to 2,568.20.

More delays in coming up with a euro zone plan could unhinge markets already under pressure from signs the crisis was spilling beyond Greece's borders.

Financials were among the worst performers, with the KBW bank index <.BKX> down 1 percent after jumping more than 5 percent on Monday. JPMorgan Chase & Co lost 2 percent to $31.63.

Potentially adding to investor nervousness, Jean-Claude Trichet, head of the European Central Bank, said the debt crisis has become systemic and risks to the economy were increasing rapidly with Europe's banks in the danger zone. [ID:nL5E7LB1JM]

The euro dipped on caution over the Slovakia vote. The fortunes of U.S. stocks have been closely tethered to the single currency in recent sessions. [USD/]

Investors will shift focus to the start of the earnings season, with results due from top U.S. aluminum producer Alcoa Inc after the closing bell.

Global economic concerns have sparked a precipitous drop in metals prices in recent months and led analysts in the past week to lower their consensus earnings estimate for Alcoa. [ID:nN1E7990GK] (Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)

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