Stocks decline sharply as Italy braces for new political crisis.
U.S. stocks declined across the board Tuesday as Italy’s brewing political crisis dampened investors’ appetite for riskier assets.
The Dow Jones Industrial Average (NYSEARCA:DIA) plunged 391.64 points, or 1.6%, to 24,361.45. Dow industrials were down more than 500 points earlier in the day.
More broadly, the S&P 500 Index (NYSEARCA:SPY) declined 1.2% to 2,689.86, with nine of 11 primary sectors finishing lower.
The technology-focused Nasdaq Composite Index (NYSEARCA:QQQ) fell 0.5% to close at 7,396.26.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) peaked 18.78, which would have marked the highest settlement in over a month. The so-called “fear index” settled at 16.98, having gained more than 28% from the previous session’s close.
Italy’s populist parties were unable to form government after President Sergio Mattarella essentially blocked their proposal for a coalition bloc. On Monday, the International Monetary Fund’s Carlo Cottarelli was given caretaker duties ahead of a planned election as early as the fall.
In commodities, oil prices faced renewed pressure on Wednesday as investors braced for a ramp up in production from OPEC and Russia. U.S. West Texas Intermediate (WTI) futures declined $1.07, or 1.6%, to $66.81 a barrel on the New York Mercantile Exchange. After being down for most of the day, the Brent futures contract reversed course trade slightly higher at $75.35 a barrel.
The Final Word: Political turmoil is once again wreaking havoc on stocks. This theme has played out before, with negative consequences for Wall Street.