Stocks drop after feds unveils new bank plan


POSTED: Wednesday, February 11, 2009

NEW YORK » Investors are frustrated with the government's latest bank bailout plan - and showing it by unloading stocks.

The major stock indexes fell more than 4 percent yesterday, including the Dow Jones industrial average, which tumbled 382 points. Financial stocks led the market lower, a sign of how concerned Wall Street is about the government's ability to restore the health of the banking industry.

Traders and investors said the lack of specifics from Treasury Secretary Timothy Geithner on how the government will direct more than $1 trillion in public and private support was troubling.

The Dow industrials fell 381.99, or 4.62 percent, to 7,888.88. It was the lowest close since Nov. 20, when the blue chips finished at their lowest level since March 2003.

Broader stock indicators also tumbled. The Standard & Poor's 500 index fell 42.73, or 4.91 percent, to 827.16, and the Nasdaq fell 66.83, or 4.20 percent, to 1,524.73.

The Russell 2000 index of smaller companies fell 22.17, or 4.74 percent, to 445.77.

Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 1.76 billion shares.

Bond prices jumped as investors sought the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.83 percent from 2.99 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.31 percent from 0.32 percent late Monday.

The dollar rose against other major currencies. Gold prices also rose.

Light, sweet crude fell $2.01 to settle at $37.55 a barrel on the New York Mercantile Exchange.

Bank of America Corp. fell $1.33, or 19.3 percent, to $5.56, while Wells Fargo & Co. fell $2.71, or 14.2 percent, to $16.35.