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Stocks Slump at Close to Erase Dow, S&P 500 First-Quarter Gains

NEW YORK (TheStreet) -- Stock markets slumped into the close on Tuesday, enough to erase gains for the S&P 500 and Dow Jones Industrial Average for the first quarter of 2015. 

The S&P 500 and Dow both declined slightly for the quarter against a backdrop of continued declines in oil prices, a higher U.S. dollar, mixed domestic data, and a resurgence of volatility, while the Nasdaq finished slightly up for the quarter.

All these issues played a hand in pressuring markets on Tuesday, causing stocks to retreat from a rally of more than 1% a day earlier. By Tuesday's close, the S&P 500 was down 0.88%, the Dow slid 1.1%, and the Nasdaq fell 0.94%.

Crude oil prices fell as negotiations between Iran and six world powers over a nuclear deal looked to continue into Wednesday's session. Conversations may continue tomorrow, "if necessary, as long as the conversations continue to be productive," White House spokesman John Earnest said Tuesday.

If passed as proposed, Iran will be restricted from developing nuclear weapons in exchange for the lifting of economic sanctions. Easing sanctions would mean the release of Iranian oil into an already-oversupplied global commodity market. West Texas Intermediate crude oil on Tuesday fell 2.3% to $47.53 a barrel.

However, some economists argue the reaction to potential Iranian crude adding to global markets in the near term may be an over-exaggeration.

"Although Iran may have a sizeable inventory in floating storage ... ready to be released upon the lifting of oil sanctions, the reality is that it would still be a gradual and protracted return of its production to the global market in the next year or so as flows ramp up," said Schneider Electric commodity analyst Matt Smith.

Commodity stocks were among the worst performers on markets Tuesday. Dow Chemical (DOW), Freeport-McMoRan (FCX), Teck Resources (TCK), BHP Billiton (BHP), and Rio Tinto  (RIO) were all lower. The Energy Select Sector SPDR ETF (XLE) dropped 0.59%, while the Materials Select Sector SPDR ETF  (XLB) fell 1%. 

The U.S. dollar continued to climb against other major international currencies, looking to close out its best quarter since 2008. The euro headed for its worst quarter on record, down around 11% since January as the eurozone and U.S. diverge in monetary policy.

On Tuesday, the U.S. dollar gained 0.77% against the euro, 0.5% against the Aussie dollar, and 0.49% against the Swiss franc. A higher U.S. dollar has the potential to limit earnings growth at a number of U.S. multinationals.

Consumer confidence jumped to 101.3 in March, according to the Conference Board's monthly survey. That was an improvement on February's 98.8 reading and better than an expected 95.5. Confidence hit its highest level since before the Great Recession in January.

"There's still confidence out there from the consumer. Despite what we saw in yesterday's spending numbers, they are feeling confident about their current positions," said Calvin Silva, senior retail specialist at Nasdaq Advisory Services, in a call. "It paints the picture of consumers continuing to strengthen their own personal balance sheets.

Consumer spending was up just 0.1% in February, missing economists' estimates, though recovering from two straight months of declines.

"The economic data has been unquestionably mixed and there's little doubt in our mind that first quarter GDP, continuing a trend we've seen for much of the recovery, will be quite weak," said BTIG chief strategist Dan Greenhaus. "Today's data doesn't do much to change that overrding narrative and as we progress through the year, we think economic data will end up somewhere in-between the strong jobs numbers and weak-everything-else."

Making news on Tuesday, Charter Communications (CHTR - Get Report) surged 5.3% after announcing it will acquire Bright House Networks for around $10.4 billion. Bright House has approximately 2.5 million cable subscribers.

U.S. Steel (X) dropped 4.1% on news it will temporarily idle its Minntac plant of its Minnesota Ore Operations, effective June 1. The company said the move was due to "challenging market conditions."

Priceline (PCLN) added 1.3% after being upgraded to buy from hold at Stifel. The firm said after a recent pullback, the stock is at an attractive level, particularly given European headwinds have now been priced in.

IBM (IBM) moved 1.3% lower after announcing it will invest $3 billion over the next four years building an "Internet of Things" unit. The division will aim to develop technology to gather and analyze real-time data.

J.C. Penney (JCP - Get Report) spiked 7.4% after Piper Jaffray raised its price target on the department store retailer to $14 and increased its comp estimates for the first quarter. Analysts said the increase was on favorable weather conditions compared to last year.

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