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As the Dow Jones industrial average tumbled more than 200 points and safe-haven moves for US Treasurys escalated, investors sought protection with the Chicago Board Options Exchange's Volatility Index [VIX 23.84 
3.65 (+18.08%) 
], which soared as much as 27 percent in heavy trading.
The VIX allows investors to buy options protection against market tumult, and they took full advantage as the financial markets thundered. Tuesday marked the third straight triple-digit move in the Dow.
"When the stock market does this in conjunction with a flight to safety in bonds and a flight to safety in the dollar and the yen, then you should expect a jump in the volatility index," said Andrew Wilkinson, senior strategist at Interactive Brokers.Read more
"At a minimum, the federal data tell us that states are not likely to get bailed out by good news in April, and that some will find that they face new shortfalls," Boyd said. Heading into tax day, fiscal year-to-date personal income tax collections were lagging the same period in fiscal 2009 in several states. Another drop in revenue could stress already tenuous budget situations in many states, he said. The fiscal years for almost all states ends on June 30 and they have been trying to draft budgets as the recession that began in 2007 continues to bite into their revenue. On the national level, there are many signs pointing to the end of the recession this year, and certain states are entering economic recovery. Still, states heal slowly from downturns because income tax revenues decline when residents suffer prolonged joblessness while the demand for social services such as healthcare spikes when people lose work.
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