NEW YORK » The dawn of the Obama presidency could not shake the stock market from its dejection over the rapidly deteriorating state of the banking industry.

Financial stocks, many of them falling by double digit percentages, led a huge drop on Wall Street yesterday 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 dollar 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: 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.

The shrinking value of bank stocks means the financial industry accounts for less than 10 percent of the Standard & Poor's 500 index for the first time since 1992. At the end of 2006, banks made up 22 percent of the stock market benchmark.

Investors are expecting Washington will be a central part of the economic recovery.

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. The Dow's showing was its worst ever for an Inauguration Day.

Broader stock indicators also fell sharply yesterday. 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 consolidated volume came to 6.23 billion shares compared with 5.92 billion shares traded Friday.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.37 percent from 2.34 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.10 percent from 0.11 percent late Friday.

Light, sweet crude rose $2.23 to settle at $38.74 a barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, while gold prices rose.