Markets plunged worldwide Tuesday as investors worried that a growing political crisis in Italy could lead to its withdrawal from the Eurozone in a replay of Britain’s vote to exit two years ago.

The Dow Jones industrial average sank 505 points before a slight recovery to close down 391 points — 1.58 percent — on worries that the Italian crisis could bleed throughout the Eurozone.

The Standard & Poor’s 500-stock index, tech-heavy Nasdaq Composite and Russell 2000 all suffered losses Tuesday as the concerns in Italy spread to U.S. traders.

Investors sold out of bonds in the southern European countries and the Italian banks and stock markets were hit on worries that Italians might eventually ditch the euro. The Italian and Spanish stock markets suffered the worst, with stock market drops in the 2.5 percent range. Italy’s UniCredit, among its most important banks, saw its stock decline sharply.

European currencies lost ground against the dollar, while the major stock indexes — Stoxx Europe 600, Britain’s FTSE 100 and Germany’s DAX — all lost ground.

“We got a lot going on,” said Chris Gaffney, president of EverBank World Markets. “The fear is that the next Italian election will strengthen the ‘euroskeptics’ and lead to a call for Italy to exit the European Union.”

The Dow is down 1.45 percent on the year. The S&P 500 is slightly positive so far in 2018.

In the U.S. markets, financial services were hit the hardest with JPMorgan Chase down 4.2 percent, followed by Goldman Sachs down 3.4 perccent and American Express down 3.3 percent in late-day trading. Coca-Cola was the only bright spot in the Dow, squeaking just above the flat line.

Most of those declines followed the sharp drop in the yield on the 10-year U.S. Treasury bond below 3 percent as the demand rose. Yields work inversely to a bond’s price.

The yield on the 10-year Treasury is one of the most closely watched financial measures in the world, along with the price of oil, gold and the U.S. dollar. Many view the 10-year as a proxy for longer-term growth and inflation expectations and a thus signal for where the U.S. economy is headed.

Ten of 11 stock market sectors were in negative territory at 3 p.m. Tuesday, with real estate and utilities outperforming the rest of a sagging market. The worst performers were financials, industrials, materials, health care and consumer staples.

Investors are worried that Italy could become another Greece, which required bailouts by the International Monetary Fund and European Central Bank between 2010 and 2015. Italy’s economy is Europe’s third largest and could be much harder to for its fellow Eurozone members to tame than was the Greek crisis.

“Part of the issue in today’s market stems from the fact that Moody’s threatened to downgrade the sovereign credit rating of Italy on Friday,” said Wayne Wicker, chief investment officer at ICMA Retirement Corporation. The downgrade caused borrowing costs for Italy to soar, with the nation’s yield on its government debt surging.

Italian President Sergio Mattarella on Sunday blocked the formation of a coalition government, raising the prospect that a populist coalition could gain ground and lead to an exit from the Eurozone. Some have dubbed the movement “Quitaly” and “Italexit” in a play on Brexit from its neighbor to the north.

Markets were uneasy across the board with the Chicago Board Options Exchange Volatility Index, popularly known as the VIX, jumped.

Billionaire investor George Soros added to the agitation. The hedge fund manager and philanthropist said he is worried that the world may be in for another “major financial crisis.”

“The European Union is in an existential crisis. “ Soros said in prepared remarks at the annual meeting of the European Council on Foreign Relations in Paris on Tuesday.

Soros cited increasing anti-European Union sentiment — like the populism currently afoot in Italy — the U.S. backing out of the nuclear Iran nuclear deal and a rising dollar as ingredients for a crisis.

Economist Mohamed El-Erian said on CNBC Tuesday morning that the worldwide synchronized economic boom might not be what people thought.

“People are now realizing the only economy with real legs to it was the U.S. economy,” El-Erian said on the show.

Italy, which like Spain and Greece suffers from heavy debt, saw the yield on its debt rise dramatically as investors fled to the safety of the dollar and U.S. Treasury bonds. The gap between Italian and German 10-year bond yields closed at the widest spread in four years, another indication of political risk to the Eurozone.

“This action in bond markets has now spread to equities as investors are reminded of some of the geopolitical concerns that remain in Europe,” Wicker said.

“Although a major exit from the Eurozone, such as Italy leaving, would be a negative for the stability of markets, as long as the Eurozone remains in place – which I believe is likely – then markets should eventually return to normal,” said Chris Zaccarelli, chief investment officer of Independent Advisor Alliance, in an email.

Zaccarelli said that although the Italian imbroglio may be temporary, “crises and contagion often start in a small way and then move in unpredictable ways. Some caution is warranted.”