The Dow and S&P 500 fell on Thursday as fears any proposed new restrictions by the Obama administration on big banks would cut profits at large trading firms like Goldman Sachs Group.
President Barack Obama, fresh from his party's election defeat in the U.S. Senate, will propose later Thursday stricter limits on financial risk-taking in a move that may recall Depression-era curbs on banks.
You're getting a little bit of pre-positioning ahead of these comments from President Obama, said Nick Kalivas, vice president of Financial Research & Senior Equity Index Analyst at MF Global in Chicago.
The more people think about it, the more uneasy they are.
Other large banks also slumped, including JP Morgan Chase & Co
The Dow Jones industrial average <.DJI> dropped 150.84 points, or 1.42 percent, to 10,452.31. The Standard & Poor's 500 Index <.SPX> dropped 14.34 points, or 1.26 percent, to 1,123.70. The Nasdaq Composite Index <.IXIC> dropped 18.04 points, or 0.79 percent, to 2,273.21.
(Additional reporting by Leah Schnurr; Editing by Padraic Cassidy)