Why the Dow's Crying "Mamma Mia"

After a strong opening, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) fell sharply on Italian election worries, finishing down 216 points, or 1.6%, with 100 points disappearing in just the last 15 minutes of trading. The broad-based S&P 500 was down more than 1.8%, and the VIX, Wall Street's volatility indicator, jumped 34%.

Concerns about Europe had been relegated to the back burner for the past few months, but returned with a vengeance as Italians sent a strong anti-austerity response at the ballot box today. The vote will likely lead to an unstable coalition government, and has sparked concerns that the new government may not control spending and keep the deficit below 3% of its GDP, as required by the European Central Bank. Italians' disgust with their government could be seen in former comedian Beppe Grillo's newly formed Five Star Movement party winning 25% of the vote and current Prime Minister Mario Monti's party winning just 10%. Complete results will be known tomorrow.

Seemingly overlooked by investors today was the upcoming sequester, which President Obama addressed, asking Congress to avoid the broad spending cuts "with just a little bit of compromise." With three days left until the deadline, however, both parties seemed at a standoff with no major steps being taken.

Not surprisingly, Bank of America (NYSE: BAC  ) led the losers on the Dow. The financial giant is among the most volatile of the blue chips, and financial companies are particularly sensitive to news such as today's events that could jeopardize the Eurozone. Italy is the biggest of the turbulent economies within the Eurozone and further uncertainty will raise the risk premium for banks as well as Italian borrowing rates and the possibility for a default.

McDonald's (NYSE: MCD  ) was only one of three Dow stocks to finish in the green today, gaining 0.9% to make it the day's winner. The burger chain is going ex-dividend on Wednesday, and got an endorsement of sorts from Oscar winner Jennifer Lawrence on the red carpet yesterday. Toronto's The Globe and Mail also ran a report over the weekend showing that the Golden Arches is challenging Tim Horton's supremacy north of the border.

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