U.S. stocks slump as Greece deal delayed

NEW YORK (MarketWatch) � U.S. stocks made their biggest drop of the year Friday, quitting five weeks of gains for the S&P 500 and Nasdaq Composite, on worries that efforts to keep Greece from defaulting were falling apart.

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As stocks dove, the Chicago Board Options Exchange Volatility Index VIX leapt above 20 for the first time in nearly two weeks, rising more than 11%.

The move �doesn�t represent huge panic, but as people get too complacent, they need to be reminded all is not well in the world, although domestically, things have improved,� said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research.

The Dow Jones Industrial Average DJIA �trimmed some losses in the final minutes, falling 89.23 points, or 0.7%, to 12,801.23, tallying a loss of 0.5% for the week.

Alcoa Inc. AA �led declines, falling 3.3%. Only one of the Dow�s 30 components rose.

The S&P 500 index SPX �retreated 9.31 points, or 0.7%, to 1,342.64, for a loss of 0.2% for the week. Natural-resource companies were hardest hit while utilities lost the least ground among its 10 major industry sectors. All closed lower.

The Nasdaq Composite COMP �declined 23.35 points, or 0.8%, to 2,903.88. For the week, it declined 0.1%.

For every stock advancing nearly three fell on the New York Stock Exchange, where 750 million shares traded. NYSE composite volume was 3.8 billion.

The euro and commodities prices also fell, while the dollar DXY �and Treasury prices gained.

Equities around the globe declined after emergency talks of euro-zone finance ministers ended with Luxembourg Prime Minister Jean-Claude Juncker saying Greece has to find 325 million euros in spending cuts.

�Even if Greece falls apart, we�ll have a day or two pullback, and be glad we�re done with this. Then we can stop worrying about Greece and focus on our domestic economy, which is doing quite well

Randy Frederick, Schwab Center for Financial Research

Separately, the head of one of three political parties supporting Greece�s interim Prime Minister Lucas Papademos said he would not back the austerity moves. Read more on the latest uncertainty surrounding Greece.

The major indexes furthered their fall after a gauge of consumer confidence came in below expectations. The University of Michigan/Thomson Reuters initial index of sentiment for February declined to 72.5 from a reading of 75 at the end of January. Read more on sentiment.