The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, soared 46 percent to 46.80, the highest since March 2009. The Morgan Stanley Cyclical Index of 30 stocks tumbled 9 percent. The Dow Jones Transportation Average, which is also a proxy for the economy, retreated 7 percent. Ford sank 8.4 percent to $USUS9.93. Caterpillar decreased 9.2 percent to $USUS82.60. The KBW Bank Index of 24 stocks slumped 11 percent. Bank of America dropped 20 percent, the most in the S&P 500, to $USUS6.53. American International Group Inc., the bailed-out insurer, sued the largest US lender by assets over $USUS10 billion in losses on mortgage-bond investments. 'Double Dip' "The bias that exists, and that is gaining credibility, is that a double dip is ahead of us," said Charles Peabody, an analyst at Portales Partners LLC in New York. "If that's the case, then something like Bank of America is going to have to raise substantial equity externally."