NEW YORK: Stocks had their worst drop in more than three months Monday as the prospect of political trouble in Italy, the euro currency region’s third-largest economy, focused the markets again on Europe’s debt crisis.
The Dow Jones industrial average fell 216.40 points, or 1.6 percent, to 13,784.17, its biggest drop since Nov. 7.
The Standard & Poor’s 500 index fell 27.75 points, or 1.8 percent, to 1,487.85, dropping below 1,500 for the first time in three weeks. The Nasdaq composite dropped 45.57 points, or 1.4 percent, to 3,116.25.
Investors dumped Italian government bonds, sending their yields higher, and erased most of an early rally in Italy’s stock market. The yield on Italy’s 10-year government bond shot up to 4.43 percent from 4.12 percent early in the day, a sign that investors’ confidence in Italy’s government was dimming. The question was whether Italy’s election could set off another crisis of confidence in the euro.
The yield on the 10-year Treasury note fell sharply as investors plowed money into U.S. bonds. The yield fell to 1.88 percent from 1.96 percent late Friday.