New York: US stocks slid on Tuesday as investors paused to reassess the likely success of the government’s latest plans to clean up bank balance sheets and revive the financial system, a day after initial euphoria over the plan drove huge gains.
Bank stocks, which posted their best day in at least 16 years on Monday, dragged Wall Street lower as investors booked profits amid questions whether the US government’s plan to spend up to $1 trillion to buy up toxic bank assets would work.
The S&P financial index fell 6.5%. Bank of America lost 8.3% to $7.15, JPMorgan Chase & Co lost 9.2% to $26.22, while Goldman Sachs shed 1.4% 110.33.
“There is a fair amount of debate about what has been proposed ... and whether this is actually going to solve the problem or not,” said Paul Nolte, director of investments at Hinsdale Associates in Hinsdale Illinois.
Technology shares, up 22% since 9 March as measured by the S&P information technology index, were among the biggest drags after helping the Dow and the S&P 500 on Monday to post their biggest one-day percentage rise since late October.
The Dow Jones industrial average was down 115.65 points, or 1.49% at 7,660.21. The Standard & Poor’s 500 Index was down 16.59 points, or 2.02%, at 806.33. The Nasdaq Composite Index was down 37.43 points, or 2.41% at 1,518.34.
Technology stocks were among the biggest drag on Nasdaq. Qualcomm Inc fell 1.9% to $38.08, Microsoft Corp fell 2.3% to $17.91, while Intel Corp dropped 3% to $15.05.
A drag from energy prices also contributed to the downside as oil prices softened after Monday’s surge. Exxon Mobil was among the Dow’s biggest drags, down 1.7% at $69.35. Front month crude fell 0.3% to $53.98 per barrel.
Shares of General Electric closed modestly lower, slipping 0.6 percent at $10.37. Deutsche Bank on Tuesday said it remains comfortable with GE’s ability to support its finance unit until the end of 2010.
Trading was active on the New York Stock Exchange, with about 1.65 billion shares changing hands, above last year’s estimated daily average of 1.49 billion, while on Nasdaq, about 2.02 billion shares traded, below last year’s daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2144 to 917 while decliners beat advancers on the Nasdaq by about 1873 to 793.