The dawn of the Obama presidency was not enough to shake Wall Street from its dejection over the banking industry's growing problems. Stocks tumbled Tuesday, sending the major indexes down more than 4 percent as financial shares plunged.
After hearing the new president's inaugural address Tuesday, investors went back to unloading stocks. Traders on the floor of the New York Stock Exchange paused at times to watch the inauguration ceremony and Obama's remarks, but the transition of power didn't erase investors' intensifying concerns about the struggling economy. The Dow Jones industrial average fell 332 points, its biggest slide since Dec. 1.
Financial companies led the market lower as investors worried about the state of the world's banks. 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.
The shrinking dollars in banks leaves the financial industry accounting 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.
The slide in banks came as 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 did little to ease their concerns.
"At this stage, markets in general and bank investors specifically are really looking to government as the way out," said Jack Ablin, chief investment officer at Harris Private Bank. "Certainly, of just about all of inaugurations that I can recall today's event probably has the not only the symbolic importance but really tangible importance to the stock market."
According to preliminary calculations, 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.
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.
Declining issues outnumbered advancers by about 9 to 1 on the New York Stock Exchange, where volume came to 1.72 billion shares.
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