U.S. stocks plunged and the Dow Jones Industrial Average fell by more than 400 points after Treasury Secretary Timothy Geithner did little to slake traders' thirst for details on the U.S.'s plans to aid ailing financial institutions.
Stocks have ticked up and down in a tight range since the inauguration of President Barack Obama in late January, waiting for the new administration's plan to stabilize the financial system. Tuesday, Treasury Secretary Timothy Geithner outlined a wide-ranging plan to buy toxic assets from banks and backstop credit markets in a late-morning speech.
But with scant specifics, stocks have sold off with large banking companies pushing the DJIA down 400 points, or 4.8%, to 7870. Bank of America, one of the banks lumbered with "toxic assets," was the weakest stock on the Dow, dropping 19%, and Citigroup was off nearly 17%. In fact, all 30 of the blue-chip average's components were in the red.
"The market was really hopeful we would get something substantive out of Geithner and the Treasury today, but once again, he was bedeviled by the details," said Bill Knapp, investment strategist with Mainstay Investments.
In particular, Knapp and others said the biggest disappointment was a lack of details about a possible public-private participation plan and what direction such a plan would take. Reports have circulated about a possible "bad bank" plan where the government might buy toxic assets off of banks' balance sheets, but there was no hint from Geithner on what or when that may happen.
marketwatch
