Market Wrap for Monday, February 25: Stocks Plunge on Italy Fears

The U.S. stock market was hit hard on Monday as investors reacted to uncertainty emanating out of Italy on election day.

The Dow lost more than 200 points on fears that a divided Italian parliament could get in the way of fiscal reforms and hamper EU stability. The U.S. dollar and Treasuries were both higher on the session on risk aversion.

The VIX surged more than 35 percent as money flowed out of stocks and into safer assets.

Major Averages

The Dow Jones Industrial Average fell 216 points, or 1.55 percent, to 13,784.

The S&P 500 lost 28 points, or 1.83 percent, to finish at 1,488.

The Nasdaq Composite shed almost 46 points to 3,116.

Commodities

Crude oil prices were little changed on Monday to start off the trading week. Late in the day, NYMEX crude futures, the U.S. benchmark, were down around 0.12 percent to $93.00. Brent contracts had risen around 0.17 percent to $114.34. Natural gas jumped on the session, adding almost 4 percent to $3.41.

Precious metals climbed on Monday, but remain in a downtrend. At last check, COMEX gold futures had risen 1.45 prcent and were trading at $1,596. Silver futures rose around 2 percent to $29.13.

Grain prices were largely lower on the day, with the only gainer being corn which traded up 0.40 percent. Wheat lost almost 2 percent on the session. Soft commodities mostly traded within a 1 percent range on the day, although cotton fell almost 2 percent.

Bonds

Treasury prices rose sharply throughout the day on Monday and closed near session highs. Late in the day, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) was up 1.72 percent to $119.04. The surge in prices sent yields lower.

The yield on the 2-Year Note fell one basis point to 0.24 percent. The yield on the 5-Year Note plunged six basis point to 0.78 percent.

Yields on the 10-Year Note and 30-Year Bond fell nine and eight basis points to 1.90 percent and 3.10 percent, respectively.

Currencies

The U.S. dollar rose on risk aversion to start off the trading week. Near the close of the equity market, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was up 0.45 percent to $22.33.

The closely watched EUR/USD wass last trading down 0.44 percent to $1.3121. The greenback, however, fell around 0.85 percent against the yen on the day.

Volatility and Volume

The VIX exploded more than 35 percent higher on the day to above 19.

Volume was lighter than usual despite the sell-off. Only around 83.5 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 131 million.

Stock Movers

Affymax (NASDAQ:AFFY) plunged more than 85 percent after the company pulled its anemia drug in the wake of reports of severe allergic reactions in some kidney-disease patients.

Amgen (NASDAQ:AMGN) rose 3 percent in the wake of the news from Affymax. Amgen has a competitive drug on the market.

Hertz Global Holdings (NYSE:HTZ) rose a little less than 2 percent after gapping higher in the wake of the company's Q4 earnings results.

Elan (NYSE:ELN) climbed 5 percent after pharmaceutical investor Royalty Pharma LLC dislosed that it had approached the biotech company with a $6.55 billion takeover offer. Royalty said that it has not received a formal response to its proposal.

Shares of Dillard's (NYSE:DDS lost more than 9 percent after the company released its fiscal Q4 earnings results.

3D Systems (NYSE:DDD) fell 9 percent after the company's quarterly report.

Zynga (NASDAQ:ZNGA) climbed almost 8 percent on Monday as investors reacted to online gaming being legalized in Nevada last week.