Reporting from Los Angeles and New York — Major U.S. stock market indexes tumbled more than 3% today to their lowest levels in more than a decade as confidence in the financial system and the overall economy continued to deteriorate.
The Dow Jones industrial average sank 250.89 points, or 3.4%, to 7,114.78, an 11-year low, while the broader Standard & Poor's 500 index dropped 26.72 points, or 3.5%, to 743.33, a nearly 12-year low.
In the last six trading days, the S&P has fallen 10%, while the Dow is off 9%.
The declines today came as the Obama administration sought to bolster confidence in the country's banks with a statement emphasizing that it was "standing firmly behind the banking system."
Financial stocks initially rose on the statement and on reports that the government might ease the terms of its investments in Citigroup Inc. and other banks, but the sector's share prices sank throughout the day. An index of financial stocks in the S&P 500 lost 3%.
"Every time the government opens its mouth these stocks go down," said Nancy Bush, an analyst at NAB Research in Annandale, N.J. "The government lacks credibility at this point on the issue of the banks. It's that simple."
Late in the day, the decline in bank stocks and the overall market steepened on a CNBC report that insurance titan American International Group was coming back to the government for more money as the company prepared to report a massive fourth-quarter loss.
The overall S&P fell through its 2008 low of 752.44, reached on Nov. 20, confirming that the bear market that began late in 2007 didn't end in November.
The Dow, which fell through its November low last week, today fell past its low of the 2000-2002 bear market.
That means both of the indexes have wiped out the last of their gains from the five-year bull market that began in 2002.
