U.S. stocks ended sharply lower on Tuesday, with the Dow industrials down nearly 400 points as traders reacted to fresh political drama in Italy after a three-day weekend. The Dow Jones Industrial Average dropped 391.64 points, or 1.6%, to 24,361.45 whilst the S&P 500 fell 31.47 points, or 1.2%, to 2,689.86 with financials leading the declines, down 3.4%, tracking falling Treasury yields.

European stocks finished lower, led by a selloff in Italian equities. Investors were assessing the prospect of new elections in Italy, which could effectively serve as a referendum on the euro. Italy’s FTSE MIB index tumbled 2.7% to end at 21,350.88 with the UK’s FTSE 100 index falling 1.3% to end at 7,632.64. Another Italian election looks likely within a few months, and investors fear it could turn into a referendum on the country’s membership in the euro.

Italians may return to polls

Italy may hold repeat elections after the man asked to be prime minister failed to secure support from major political parties for even a stop-gap government as markets tumbled on the growing political turmoil. Reports have emerged that there is now a chance that President Sergio Mattarella could dissolve parliament in the coming days and send Italians back to the polls as early as July 29.

Italy has searched for a new government since inconclusive elections in March, with the president finally designating former International Monetary Fund official Carlo Cottarelli as interim prime minister until a new vote is held. Other euro zone countries are concerned about the turmoil in the currency bloc’s third-largest economy. French President Emmanuel Macron defended what he called Mattarella’s courage and German Chancellor Angela Merkel spoke of the need to obey rules governing the euro.

Fiat Chrysler’s path to electric cars

Boss of global auto manufacturer, Fiat Chrysler, Sergio Marchionne is expected to outline new plans for electric and hybrid cars in a strategy presentation on Friday, aiming to ensure the world’s seventh-largest carmaker remains in the race in the absence of a merger. Influenced by Tesla’s portion of the market-share, the 65-year-old will present the company’s strategy to 2022, his final contribution to the company he turned around and multiplied in value through 14 years of canny dealmaking.

Marchionne has already said half of the wider FCA fleet will incorporate some elements of electrification by 2022, while luxury marque Maserati will spearhead FCA’s electrification drive by making all new models due after 2019 electric. Germany’s Volkswagen, Daimler, BMW and U.S. rivals GM and Ford have committed to spending billions of euros each in coming years to try produce profitable cars powered by cleaner fuels.