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Stocks plunge as Italy appears headed for gridlock

Stocks dropped sharply on Monday as investors worried that Italy could be seized with political paralysis, stymieing the country's economic reforms and causing another flare-up in the region's debt crisis.

The Dow Jones industrial average plunged 216 points to 13,784 Monday, a loss of 1.6 percent and the biggest drop since November.

The Standard & Poor's 500 dropped 27 points, or 1.8 percent, to 1,487. The Nasdaq lost 45 points to 3,116.

An early gain was gone by midday after reports from Italy suggested that the country was headed for political gridlock following strong gains by former premier Silvio Berlusconi and a protest campaign led by a former comedian.

Four stocks fell for every one that rose on the New York Stock Exchange. Volume was average, 3.8 billion shares.

The Standard & Poor's 500 had its first weekly decline of the year last week. Investors sent stocks plunging after minutes from the Federal Reserve's latest policy meeting revealed disagreement over how long to keep buying bonds in an effort to boost the economy.

Many analysts say the Fed's bond-buying program and the resulting low interest rates have been a big driver behind this year's stock rally, which lifted indexes to their highest levels since 2007.