Market Extra: Stock-market volatility gauge hits 2-month high as Italy sparks global equity selloff

After a bout of relative calm this month, volatility returned to Wall Street Tuesday as stocks tumbled.

The Cboe Volatility Index VIX, +29.50% or VIX, which measures expectations for volatility in the S&P 500 SPX, -1.16% over the coming 30 days, jumped by 38% to above 18 on Tuesday to hit the highest level in more than two months, as investors fled equity markets in favor of government bonds.

The S&P 500 dropped 43 points, or 1.6%, to 2,677, its largest one-day decline since April 6, while the Dow Jones Industrial Average DJIA, -1.58% remained down more than 400 points.

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