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Dow tumbles nearly 400 points on Italy fears and US-China trade tensions

Volatility gripped Wall Street on Tuesday.The Dow plunged more than 392 points, or 1.6%, on fears about politi...

Posted: May 30, 2018 5:54 AM
Updated: May 30, 2018 5:54 AM

Volatility gripped Wall Street on Tuesday.

The Dow plunged more than 392 points, or 1.6%, on fears about political turmoil in Italy and renewed trade uncertainty between the United States and China. It was the worst day for the Dow since April 24.

The S&P 500 and the Nasdaq slipped 1.1% and 0.5% apiece.

Related: Netflix, Amazon and Facebook are a (less dim) light on a dark day for stocks

Italy is headed for new elections, and investors worry the result could throw the European Union into turmoil. Investors soured on Italy's debt, demanding higher yields in return for taking on added risk.

The tension in Italy spread to US markets. In Wall Street's worst-case scenario, Italy, the third-largest economy in the European bloc, would vote to leave the euro.

"It's got the earmarks of a disgruntled Italy," said Arthur Hogan, chief market strategist at B. Riley FBR. "We've gotten to the point now where it's catching people's attention."

The White House also announced Tuesday that it would impose 25% tariffs on $50 billion worth of goods from China and place new limits on Chinese investments in the United States. The move caught investors by surprise. Treasury Secretary Steven Mnuchin said a trade war with China was "on hold" less than 10 days ago.

Signs of alarm showed up across the market on Tuesday.

Related: Market uncertainty is back

The VIX, Wall Street's fear gauge, spiked nearly 31% to its highest level since May 4. CNNMoney's Fear & Greed Index pushed into fear territory. A week ago, the index was flashing greed.

Investors rushed to safety in bonds. The yield on the 10-year US Treasury fell sharply to 2.77%. Yields move in the opposite direction of prices.

Last month, the 10-year yield crossed 3% for the first time since 2014. Longer-term yields have been climbing steadily as the Federal Reserve raises interest rates. Higher rates dent the value of bonds' fixed payouts.

The bond rally drove a steep bank selloff. Falling yields can make it harder for banks to make money on the interest they charge for loans.

JPMorgan Chase dropped 4%, while American Express and Goldman Sachs lost 3% to drag the Dow lower. Morgan Stanley and State Street were the worst performers on the S&P 500.

As yields fell, investors headed to higher-dividend stocks such as utilities and real estate.

Coca-Cola was the only company on the Dow to finish the day ahead The Dow Jones Utilities Average closed up too.

"It's a typical risk-off kind of day," Hogan said.

Meanwhile, a drop in oil prices put pressure on energy stocks.

Oil prices have slumped around 10% since Saudi Arabia's energy minister said on Friday that Saudi-led OPEC and Russia would pump more oil. US crude dipped 1.6% to a little below $67 a barrel.

--CNNMoney's Matt Egan contributed to this story.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 153270

Reported Deaths: 3807
CountyCasesDeaths
DeSoto10249104
Hinds10095199
Harrison7173111
Jackson6440124
Rankin5705103
Lee517095
Madison4902107
Forrest385986
Jones361788
Lauderdale3567147
Lafayette329752
Washington3197108
Lamar294750
Oktibbeha248462
Bolivar242484
Lowndes240464
Panola224852
Neshoba2225118
Marshall219450
Leflore206891
Pontotoc202429
Monroe201078
Lincoln192865
Sunflower191955
Warren177757
Tate175351
Union169526
Copiah165440
Pike163958
Yazoo157940
Scott156630
Itawamba155635
Pearl River153468
Alcorn152828
Coahoma151043
Simpson150353
Prentiss148431
Adams143151
Grenada141445
Leake138344
Holmes131561
Tippah126730
George126225
Covington124639
Winston123726
Hancock122840
Wayne119023
Marion117346
Attala116134
Tishomingo110042
Chickasaw108332
Newton107529
Tallahatchie97427
Clarke92453
Clay92327
Jasper83522
Stone78515
Calhoun77713
Walthall76929
Montgomery75425
Carroll73815
Lawrence72614
Smith72116
Yalobusha72028
Noxubee71917
Perry67726
Tunica61819
Greene60822
Claiborne58816
Jefferson Davis57817
Amite55214
Humphreys54319
Benton49618
Quitman4947
Webster45014
Kemper44218
Wilkinson40122
Jefferson35711
Franklin3485
Choctaw3457
Sharkey31717
Issaquena1174
Unassigned00

Alabama Coronavirus Cases

Cases: 247229

Reported Deaths: 3577
CountyCasesDeaths
Jefferson32718500
Mobile19904362
Madison13425148
Tuscaloosa13167154
Montgomery12380236
Shelby1046577
Baldwin882098
Lee778566
Morgan675150
Calhoun6366121
Etowah635166
Marshall630955
Houston532338
DeKalb489736
Cullman447442
Limestone430245
St. Clair425755
Lauderdale413354
Elmore409464
Walker3689111
Talladega353554
Jackson327123
Colbert314642
Blount294640
Autauga275142
Franklin254233
Coffee246515
Dale234454
Dallas226532
Chilton225038
Russell22313
Covington220334
Escambia198631
Chambers177250
Tallapoosa177091
Pike159214
Clarke158919
Marion141336
Winston134423
Lawrence129636
Pickens124218
Geneva12378
Marengo122524
Bibb118817
Barbour117511
Butler117342
Randolph103821
Cherokee102924
Hale97731
Fayette92216
Clay92024
Washington91619
Henry8676
Lowndes79929
Monroe79011
Cleburne77414
Macon74522
Crenshaw71230
Bullock70019
Perry6896
Conecuh68514
Lamar6838
Wilcox63918
Sumter58422
Greene42718
Choctaw42613
Coosa3464
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