Dow falls 2pc as selloff deepens on Italy fears

NEW YORK: The Dow tumbled two percent after midday Tuesday as worries about Italian political turmoil sparked a selloff in leading global equity markets.

Near 1900 GMT, the Dow Jones Industrial Average stood at 24,260.91, down nearly 500 points, or 2.0 percent.

The broad-based S&P 500 dropped 1.6 percent to 2,678.08, while the tech-rich Nasdaq Composite Index lost 0.9 percent at 7,365.51.

Leading the declines were large banks, including JPMorgan Chase and Goldman Sachs, which lost 5.1 percent and 4.2 percent.

"If there are default fears across markets, banks will be on the front line and as a result are being repriced to consider that risk more now," said Matt Miskin, market strategist at John Hancock Financial Services.

Miskin said the banks also were under stress due to speculation the Federal Reserve will lift interest rates less quickly than previously thought.

But he said Italy was the main culprit behind the selloff, describing the dynamic as a "knee-jerk reaction" to worries about systemic risk.

Italy's caretaker prime minister on Tuesday ended talks on forming a government without unveiling his cabinet line-up, following the collapse of a populist coalition's bid to govern.

New elections are considered the most likely outcome of the political saga, sparked by an inconclusive poll in March.

Analysts also have cited worries over uncertainty in Spain, where Prime Minister Mariano Rajoy faces a no-confidence vote later this week.

Besides banks, industrials and materials stocks were under pressure, with Dow members General Electric and DowDuPont both down more than three percent.