U.S. equity markets declined on Tuesday and finished near their lows of the session as President Barack Obama signed the $787 billion stimulus package into law.


Declaring it would lay the groundwork for real and lasting change for generations to come, Obama signed the bill in Colorado.


We're putting Americans to work doing the work that America needs done in critical areas that have been neglected for too long ... work that will begin real and lasting change for generations to come, the President said.


Earlier, broad-based stock selloff knocked the market within shouting distance of its bear-market low set back on Nov.20 with the DOW declining to just 60 points above the close that day. Financial shares led the way, with Citigroup, Bank of America, American Express and J.P. Morgan Chase each off by more than 8%.


The banks are likely to remain under pressure because investors are worried about the possibility of nationalization for certain firms. Treasury secretary Tim Geithner last week outlined the government's plan to stress-test twenty of the nation's largest banks, but gave few details regarding exactly what the pass/fail criteria would be and what might happen in the event a bank was not able to surpass the new requirments.


The banks will be tested under worst-case scenarios with regards to their off-balance sheet assets, which typically are the toxic and illiquid ones tied to failed mortgages and other soured loans.


The S&P rose to its high of the session at about 3:30 EST, but declined about 10 points thereafter to finish just off session lows to extend last week's 4.78% decline. At Monday's close of floor trading on the NYSE, the DOW was on 7552.60 after falling 297.81 points (-3.79%) while the S&P finished on 789.17 with a loss of 37.67 points (-4.56%). The technology-heavy NASDAQ didn't fare much better, closing on 1470.66 after declining by 63.70 points (-4.15%).


The dollar traded mostly in risk-aversion mode as stocks trended lower. The greenback ended the day gaining 1.50% on the euro, 0.32% against the pound and 2.11% against Australia's currency. The yen, which normally gains when stocks decline, ended up falling 0.69% against the greenback.


Bonds advanced as stocks were sold, pushing the yield on the 10-year note to its lowest level in three weeks. The benchmark Treasury's yield fell 25 basis points to 2.646% while yield on the two-year note lost 10.1 basis points to 0.858%.


Crude for March delivery was recently trading down $2.53 $4.19 (-6.74%) to $34.98 per barrel.


Gold for April delivery was recently trading higher by $27.90 (2.96%) to 969.40 per ounce.