。
She gazed blankly at their argument.
Literal
She [topic-は] their [genitive-の] quarrel [object-を] dazedly was-gazing-at.
茫然と (ぼうぜんと) is a 擬態語 capturing the dumbfounded, vacant-staring state of being too stunned to react — body present, mind elsewhere. Pairing it with 見つめる (purposeful gazing) is paradoxical: she's fixed on the scene yet not really processing it. The ~ていた marks the gazing as ongoing in the past — a held tableau. 口論 ('quarrel, argument') is sharper than 議論 ('discussion, debate'); it implies emotional confrontation.