Stocks Tumble, VIX Pops as Eurozone Anxieties Intensify
NEW YORK (TheStreet) -- Major U.S. stock averages each fell more than 1% Monday and the VIX fear gauged spiked as investors feared that the latest updates from Italy's elections were portending the risk that the country could backpedal from its austerity programs.
The latest projections out of Italy indicated that the center-right coalition led by former Italian Prime Minister Silvio Berlusconi was coming out ahead in the senate races. Earlier, Sky News published a headline saying that an exit poll of Italian voters indicated a return of a Pier Luigi Bersani-Mario Monti coalition, which would probably have been the most market-friendly outcome, said Andrew Wilkinson, chief economic strategist at Miller Tabak.
"Needless to say, confirmation that Italy is set for a period of political deadlock could prompt a further sell-off and perhaps a renewed period of instability for the eurozone," Capital Economics cautioned in a note.
The Dow Jones Industrial Average gave up 216.40 points, or 1.55%, to close at 13,784.
All sectors in the broader market fell, led lower by conglomerates, capital goods, financials, energy and consumer cyclicals.
Volumes swelled to more than 3.89 billion shares on the New York Stock Exchange and nearly 2 billion shares on the Nasdaq. Decliners overshadowed advancers by a ratio of 3.5-to-1 on the Big Board and 4.4-to-1 on the Nasdaq.
The VIX, which measures market volatility through options activity in the S&P 500, jumped more than 34% to 18.99.
Investors were also watching U.S. budget talks closely. Congress reconvenes in Washington this week, and a deal to avert a raft of automatic spending cuts set to kick in March 1 is looking increasingly unlikely.