Dow Jones falls nearly 400 points amid Italy, China concerns

May 29 (UPI) -- The Dow Jones Industrial Average fell nearly 400 points Tuesday amid concerns over political turmoil in Italy and renewed trade tensions with China.

The Dow Jones fell 391.64 points or 1.58 percent at the end of trading after dropping by up to 500 points earlier in the day.

Tuesday was the worst day of trading on the Dow since it dropped 424.56 points April 24.

The S&P 500 index fell 1.16 percent and the Nasdaq composite fell 0.5 percent.

Investors became concerned about Italy's $2.68 trillion debt after Italian President Sergio Mattarella appointed former International Monetary Fund official Carlo Cottarelli to be interim prime minister Monday and asked him to form an interim government.

The decision put Italy on track for new elections and the 10-year Italian bond yield rose to 3.38 percent early Tuesday, its highest level since March 2014.

"In Italy, in the short-run, the status quo prevails, [but] if elections strengthen the hand of populist parties on the left or the right, there's danger of a more radical response," chief global strategist at JPMorgan Funds David Kelly told CNBC.

American investors also worried about the prospect of Italy leaving the euro, which fell below $1.16 -- it's lowest level against the U.S. dollar.

"The more recent bout of political turmoil spanning across a number of member countries coupled with a clear loss of economic momentum in the region has investors questioning the sustainability of the recovery and the future of the bloc," chief economist at Stifel Nicolaus Lindsey Piegza said.

Also Tuesday, the White House said it would follow through on plans to impose tariffs on $50 billion worth of Chinese goods, including a 25 percent tariff on Chinese imports "containing industrially significant technology."

Amid the international market concerns, the Cboe Volatility Index -- which measures market anxiety -- rose 3.8 percent to 17.02.