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Stocks dive after Geithner's speech

NEW YORK — Investors are frustrated with the government's latest bank-bailout plan — and showing it by unloading stocks.

The major stock indexes fell more than 4 percent Tuesday, including the Dow Jones industrial average, which tumbled 382 points. Financial stocks led the market lower, a sign of how concerned Wall Street is about the government's ability to restore the health of the banking industry.

Traders and investors said the lack of specifics from Treasury Secretary Timothy Geithner on the way the government will direct more than $1 trillion in public and private support was troubling.

"The good news is they are going to spend a trillion dollars, the bad news is they don't know how," said James Cox, managing partner at Harris Financial Group.

"They built this up as being a panacea," he said. "There was so much hope pinned on them to do a good job. The expectations have been so high. It's hard to live up to."

Investors also questioned whether this plan, which followed previous efforts in the final months of 2008, would work.

Some selling was to be expected, however, as stocks rose sharply last week ahead of the announcement.

Geithner's speech "basically puts a spotlight on the fact that the government has no idea how to fix the problem," said Jeff Buetow, senior portfolio manager at Portfolio Management Consultants. "People bought on rumor and hope, and now they're selling on reality."

Investors focused on the financial rescue showed little reaction to the Senate's approval of its $838 billion economic stimulus package. The bill must now be reconciled with an $819 billion version passed by the House. Congressional leaders hope to have the bill on President Barack Obama's desk before a recess next week.

The Dow industrials fell 381.99, or 4.62 percent, to 7,888.88. It was the lowest close since Nov. 20, when the blue chips finished at their lowest level since March 2003.

Broader stock indicators also tumbled. The Standard & Poor's 500 index fell 42.73, or 4.91 percent, to 827.16, and the Nasdaq fell 66.83, or 4.20 percent, to 1,524.73.

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