On Tuesday hopes of the recession coming to an end were dashed sending U.S. stocks down after reports of the economy and banking sector.

The Dow Jones Industrial Average dropped 137.63 points, or 1.7%, to 7920.18. Its financial components were at the forefront of the decline, with J.P. Morgan Chase off 7.8% and American Express sliding 10%, even after the better-than-expected earnings report from Goldman Sachs Group following Monday's close.

Some analysts hailed Goldman's report as a sign that the end of the long-running financial crisis may be in sight, many traders saw the news primarily as an opportunity to unwind profitable bets on bank stocks, which have led sharp market gains from bear-market lows in early March.

The market's losses deepened slightly following a speech by President Barack Obama, who tried to balance optimism about a possible recovery versus the idea the U.S. economy is not out of the woods yet, with more downbeat data likely to come.

Federal Reserve Chairman Ben Bernanke seconded what president Obama had said in a separate speech at Morehouse College in Atlanta as he referred to tentative signs of recovery but cautioned that the government's efforts to stabilize the banking system must continue to show progress.