Stocks fell on Wednesday as investors were hit by a report showing yet more deterioration in the housing market, while uncertainty about Washington's plans to shore up the banking system persisted.
President Barack Obama's first address to Congress offered few new insights on government plans to stabilize the economy and shore up banks.
Investors sold off shares of financial services companies and big manufacturers including Boeing
Sales of previously owned U.S. homes plunged an unexpectedly high 5.3 percent in January, an industry group reported.
Homebuilder D.R. Horton
I still think the bank nationalization stuff is on everybody's mind, said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland. If you have banks get nationalized in Europe, does that put pressure on the U.S. to do something?
Financial shares staged a brief rebound after Federal Reserve Chairman Ben Bernanke said in a second day of congressional testimony regulators were not planning to nationalize Citigroup
Obama said in his speech on Tuesday night the United States would emerge stronger from the ongoing crisis, but investors found little in what he said to spur buying after the market's rebound on Tuesday from 1997 lows hit on Monday.
The Dow Jones industrial average <.DJI> dropped 44.53 points, or 0.61 percent, to 7,306.41. The Standard & Poor's 500 Index <.SPX> fell 4.96 points, or 0.64 percent, to 768.18. The Nasdaq Composite Index <.IXIC> shed 13.13 points, or 0.91 percent, to 1,428.70.
On Nasdaq, shares of First Solar
Shares of Citigroup rose nearly 2 percent to $2.65 while the KBW bank index <.BKX> fell 1.7 percent.
Shares of insurer Lincoln National Corp.
Shares of Wynn Resorts Ltd
U.S. regulators began stress tests on Wednesday to determine how much capital banks need. Even so, investors remain uncertain about how the government would relieve banks of money-losing assets and revive lending.
(Editing by James Dalgleish)