US stocks fell sharply Tuesday in a broad-based decline as the government announced details of its latest bailout plan.
The Dow Jones Industrial Average was down more than 300 points after Treasury Secretary Tim Geither revealed details of the bank-bailout plan. Earlier, the blue-chip index was down less than 100 points.
Some market pros said the market selloff was simply a case of buy on the rumor, sell on the news.
Tony Crescenzi of Miller Tabak said Geithner spoke to the wrong street: Main Street instead of Wall Street.
"The problem is that Geithner needed to speak more to Wall Street, where the problems lie, rather than stay at a distance as he did, and leave Wall Street with too few details with no roadmap by how it might find its way out of current difficulties," Crescenzi wrote in a note to clients.
The "Financial Stability Plan," as it's now called, consists of four main components:
1) It will set up a public-private fund to mop up to $500 billion of spoiled bank assets.
2) It will set up a consumer-lending facility to support up to $1 trillion in new lending.
3) It will devote up to $50 billion to help stem home foreclosures.
4) It will provide new funding to banks after a "stress test" to determine if the bank is healthy.
Some market watchers remain skeptical over the benefits of the plan and legendary investor Jim Rogers told CNBC it could even make things worse. The bailout will plunge the US further into debt and it is designed by the same people who failed to forecast the crisis in the first place, Rogers said.
In economic news, wholesale inventories fell 1.4 percent in December, the steepest drop in 16 years, after a downwardly-revised 0.9-percent decline in November.
Banks shares retreated, with Bank of America and Citigroup leading the Dow lower.
Hartford Financial shares fell sharply after the property and life insurer's credit rating was cut. Rival MetLife also declined.
And investors were encouraged by the latest sign of thawing in the credit market: Ciscosold $4 billion in bonds.
Intel gave techs a brief boost after the chip giant announced plans to pump $7 billion into upgrading its U.S. factories.
But it wasn't clear if the Intel move would actually create many new jobs and a reminder of the current economic condition wasn't far away as a fresh wave of layoffs swept through the market.
General Motors said it will lay off 10,000 salaried workers, or 14 percent of its global work force, as the auto maker scrambles to get costs under control to meet government mandates for its bailout.
Federal Express is slashing 900 jobs, or about 2.5 percent of its freight division.
And UBS is axing 2,000 more jobsafter earning the distinction of posting the biggest loss for a Swiss corporation ever. Still, UBS shares jumped after the bank announced it had inflows in January after a long period of outflows, indicative to some analysts that it was beginning to rebound.
Shares of Qwest Communications advanced as the company reported its profit fell 49 percent but beat expectations.
Boeing shares skidded after the aerospace giant said that the falling value of its planes meant its fourth-quarter net loss was four cents a share wider than it reported late last month. Another flurry of earnings is due before the bell.
TUESDAY: Geithner to testify before a House panel (2:30pm ET); Fed's Bernanke and Dudley speak; Earnings from DirecTV, Applied Materials and Nvidia
WEDNESDAY: House hearing with TARP CEOs; Weekly mortgage applications; international trade; weekly crude inventories; Fed's Evans speaks; Earnings from Ingersoll-Rand, Sanofi-Aventis
THURSDAY: Retail sales; weekly jobless claims; business inventories; Earnings from Coca-Cola, Aetna, Marriott and Viacom
FRIDAY: G7 finance ministers meet in Rome; Consumer sentiment; Earnings from Pepsi
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