Bank plan skepticism sinks Wall Street

NEW YORK (Reuters) - Stocks tumbled on Tuesday with the Dow and the S&P 500 down more than 4 percent, as bank shares slid on concerns that a plan to shore up the financial sector may not be enough to loosen up credit and contain the deepening recession.

Indexes slumped immediately following Treasury Secretary Timothy Geithner's announcement of a plan to mop up $500 billion in spoiled assets from the beleaguered banking system.

Financial stocks, which had spearheaded a rise in the market in recent sessions in anticipation of the plan, skidded as the lack of details in Treasury's announcement raised questions about whether the plan will be enough to rein in the financial crisis.

The KBW Banks index <.BKX> tumbled 12.2 percent and the S&P financial index <.GSPF> slid 8.9 percent.

Geithner did not provide enough "new information and maybe that is what the market doesn't like. There was a grand build-up, but content was not as dramatic," said Stephen Wood, senior portfolio strategist at Russell Investments in New York.

"There is an inability to price these assets in a way that is acceptable, so we're kind of where we were over a year ago."

Federal Reserve chairman Ben Bernanke offered the market little solace as he said the central bank's liquidity expansion was no "panacea."

The Dow Jones industrial average <.DJI> tumbled 348.30 points, or 4.21 percent, to 7,922.57. The Standard & Poor's 500 Index <.SPX> declined 38.20 points, or 4.39 percent, to 831.69. The Nasdaq Composite Index <.IXIC> slid 57.35 points, or 3.60 percent, to 1,534.21.

All 30 components of the Dow Industrials were negative, as were the 10 sectors of the S&P 500.

Shares of Bank of America slid more than 15 percent to $5.84, while JPMorgan shed 5.8 percent to $25.70 and shares of Citigroup were down 9.9 percent at $3.56.

Insurers were another standout casualty. Shares of U.S. property and life insurer Hartford Financial Services Group slid 11.7 percent to $13.27 after its credit ratings were cut. Rival MetLife , the No. 1 U.S. life insurer, was down 9.6 percent to $28.28.

Principal Financial , another insurer, tumbled 27.7 percent to $12.31. Like the banks, insurers are saddled by money-losing assets on their books.

Boeing was one of the top drags of the Dow as it reiterated the delay in the delivery of its latest jetliner, sending its stock down near 6 percent to $40.27.

McDonald's shares fell 3.2 percent to $57.12 and Wal-Mart shed 2.7 percent to $47.96, reflecting concerns about the spending environment. Citigroup cut its earnings estimate on Wal-Mart, and the top retailer later in the day said it was cutting up to 800 jobs.

Home builder MDC Holdings Inc reported results that missed Wall Street expectations, and its shares fell 10 percent to $31.82. The Dow Jones home construction index <.DJUSHB> tumbled 6.6 percent.

(Editing by Tom Hals)

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