YAHOO [BRIEFING.COM]: Equities endured a broad sell off which saw the S&P 500 drop 1.8%. Bearish sentiment built into the afternoon as the likely deadlock in the Italian general election weighed on markets.

Stocks got off to a broadly higher start as early "instant polls" suggested Pier Luigi Bersani, who is a supporter of reforms started by Mario Monti, was destined for full control of the government. This was welcomed by European markets, which rallied broadly and saw Italy's MIB climb 4.0%. The risk-on bias was confirmed by the bond market where Italian bonds were bid, and the 10-yr yield slid 27 points.

However, once the initial reports were followed by exit polls indicating a much closer race, European markets surrendered the bulk of their gains. Italian yield climbed back into positive territory, and U.S. equities slid off their opening highs. As of the U.S. close, official results remain unclear.

The financial sector was the day's weakest performer due to its heightened sensitivity to sovereign debt. In addition, banks are one of the main lines of defense in the face of economic or political uncertainty. The SPDR Financial Select Sector ETF (XLF 17.26, -0.48) shed 2.7% and Morgan Stanley (MS 22.03, -1.55) was the weakest performer among the majors. Meanwhile, Goldman Sachs (GS 147.65, -6.44) lost 4.2% after Reuters reported the investment bank will begin a fresh round of job cuts later this week.

In addition to financials, other cyclical sectors underperformed as well. The materials space saw weakness for the majority of last week and today's selling caused the sector to turn negative for the year.

Overnight, China's HSBC Manufacturing PMI fell short of expectations, suggesting the country's continued economic growth may face some challenges. Combined with the upcoming implementation of automatic spending cuts known as the "sequester," these developments weighed on industrial shares. Dow component Caterpillar (CAT 89.16, -2.38) settled lower by 2.6%.

In industrial earnings, 3D Systems (DDD 34.65, -3.32) lost 8.7% after reporting mixed earnings. Although the company beat on the bottom line, its revenue fell short of analyst expectations. In addition, the company guided full-year earnings which may not compare to estimates due to the inclusion of the Geomatic acquisition.

With cyclical stocks leading to the downside, defensively-oriented sectors registered slimmer losses than the broader market, but only telecom was able to avoid losing more than 1.0%.

Today's selling caused the CBOE Volatility Index (VIX 19.18, +5.01) to jump over 35.0% and climb above its 200-day moving average. In addition, the near-term volatility measure ended at its highest level of the year.

A safe-haven bid sent the 10-yr yield lower by 10 basis points to 1.87%.

Volume was heavy, and accelerated into the close as nearly 820 million shares changed hands on the floor of the New York Stock Exchange. Today's tally marks the highest total of the year, eclipsing last Wednesday's 816 million.

In the foreign exchange market, the euro endured a busy session which saw the common currency gain as much as 100 pips versus the dollar in early trade. However, those gains were built on the expectations of a clear win by Pier Luigi Bersani. Since the initial polls came into question, the common currency has turned negative, and is now shedding 100 pips against the greenback.

Tomorrow, December Case-Shiller 20-city Index and the FHFA Housing Price Index will both be reported at 9:00 ET. In addition, January new home sales and February consumer confidence will be announced at 10:00 ET.

Another event on the horizon is tomorrow's Humphrey-Hawkins testimony. This is the two day bi-annual testimony held by the Fed Chairman. Mr. Bernanke will testify in front of the Senate on Tuesday and the House on Wednesday.DJ30 -216.40 NASDAQ -45.57 SP500 -27.75 NASDAQ Adv/Vol/Dec 468/1.86 bln/2044 NYSE Adv/Vol/Dec 677/818.8 mln/2403

3:30 pm :

• Apr crude oil gave up all of its early morning gains as the dollar index gained strength. The energy component pulled-back from its session high of $93.94 per barrel and oscillated between positive and negative territory in afternoon action. It dipped to a session low of $92.69 per barrel as it headed into the close and settled just four cents below the unchanged line at $93.10 per barrel.
• Apr natural gas extended last session's gains as it gained support from near-term forecasts of colder, below average temperatures. Prices temporarily dipped to a session low of $3.42 per MMBtu in mid-morning action but eventually settled 3.6% higher at $3.47 per MMBtu, or just below the session high of $3.48 per MMBtu.
• Apr gold traded higher during today's floor trade despite a climb by the dollar index on uncertainly over Italian elections. Investors also await Fed Chairman Bernanke's testimony to the Senate and the House tomorrow and Wednesday. The yellow metal brushed a session high of $1591.60 per ounce and settled with a 0.9% gain at $1587.00 per ounce.
• Mar silver also held on to firm gains as it traded in a fairly consolidative pattern for most of its pit session. It brushed a session high of $29.11per ounce in late morning action and eventually settled 1.9% higher at $28.98 per ounce.