Stocks tumble on fresh bank worries
NEW YORK -- Financial stocks, many of them falling by double-digit percentages, led a huge drop on Wall Street on Tuesday that left the major indexes down more than 4 percent and the Dow Jones industrials down 332 points.
The market's angst, which began with multibillion losses reported last week by Bank of America Corp. and Citigroup Inc., intensified after the Royal Bank of Scotland's forecast that its losses for 2008 could top $41.3 billion.
The collapse in bank stocks was swift Tuesday: State Street Corp. plunged 59 percent, Citigroup fell 20 percent and Bank of America lost 29 percent. Royal Bank of Scotland fell 69 percent in New York trading.
President Obama warned the economic recovery would be difficult and that the nation must choose "hope over fear, unity of purpose over conflict and discord" to overcome the worst economic crisis since the Great Depression.
Investors are expecting Washington will be a central part of the economic recovery. But the first hours of Obama's term Tuesday did little to ease their concerns.
The Dow Jones industrial average fell 332.13, or 4.01 percent, to 7,949.09, its lowest close since Nov. 20, when the blue chips ended at 7,552.29 -- their lowest point in more than five years. It was also the blue chips' biggest drop since Dec. 1.
During much of Obama's address, the average was down about 150 points. On Inauguration Day, the Dow falls about three-quarters of the time.
Traders hadn't appeared so focused on TV screens since Sept. 29, when the House initially voted against the banking bailout package and the Dow tumbled 777 points.
Broader stock indicators also fell sharply Tuesday. The Standard & Poor's 500 index fell 44.90, or 5.28 percent, to 805.22, and the Nasdaq composite index fell 88.47, or 5.78 percent, to 1,440.86.
The Russell 2000 index of smaller companies fell 32.80, or 7.03 percent, to 433.65.
Losing issues outnumbered gainers by about 9 to 1 on the New York Stock Exchange, where volume came to 1.72 billion shares.