NEW YORK » Health care stocks, one of the better performers on Wall Street lately, led the market lower yesterday after the White House proposed cutting payments to private insurance plans.

The Obama administration's $3.55 trillion budget plan for 2010 includes cuts to Medicare, and private health insurance plans serving Medicare seniors would take the biggest hit. As investors became aware of the impact the budget, if enacted, could have on the companies, they turned against what had been one of the strongest industries in the stock market recently.

Banking shares initially pulled much of the market higher as investors welcomed plans from Washington for additional bailout measures that could provide up to $750 billion in support to the struggling banking system. But the Obama administration said the money was for a contingency fund and that it didn't plan to immediately ask Congress to add to the government's existing $700 billion rescue program.

The Dow Jones industrial average fell 88.81, or 1.2 percent, to 7,182.08. The Standard & Poor's 500 index fell 12.07, or 1.6 percent, to 752.83 and the Nasdaq composite index fell 33.96, or 2.4 percent, to 1,391.47.

The Russell 2000 index of smaller companies fell 8.49, or 2.1 percent, to 392.95.

Declining issues outnumbered advancers by about 8 to 7 on the New York Stock Exchange, where volume came to a light 1.49 billion shares.

Health stocks fell after the Obama budget proposed slowing growth of Medicare and Medicaid and trimming payments to private insurance plans. WellPoint Inc. fell $3.78, or 9.7 percent, to $35.34, while UnitedHealth Group Inc. fell $2.96, or 12.9 percent, to $20.07. Aetna Inc. fell $3.05, or 11.3 percent, to $24.03.

In other news, General Motors Corp. reported a $9.6 billion loss for the fourth quarter and said it burned through $6.2 billion of cash in the final three months of 2008. Top GM executives were in Washington, D.C., yesterday to meet with the Obama administration's auto task force to talk about restructuring and additional loans. GM fell 17 cents, or 6.7 percent, to $2.38.

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

Light, sweet crude rose $2.72 to settle at $45.22 on the New York Mercantile Exchange.