NEW YORK — Investors are frustrated with the government’s latest bank bailout plan — and showed it Tuesday by unloading stocks.
The major stock indexes fell more than 4 percent, including the Dow Jones industrial average, which tumbled nearly 382 points. Financial stocks led the market lower, a sign of how concerned Wall Street is about the government’s ability to restore the health of the banking industry. Demand rose for havens such as Treasurys and gold.
Traders and investors complained about what they saw as a lack of specifics from Treasury Secretary Timothy Geith ner on how the government will direct more than $1 trillion in public and private support to the financial system.
The plan is aimed at restoring proper functioning to credit markets, which seized up over worries about bad debt after the September bankruptcy of Lehman Brothers Holdings Inc. The latest plan calls for a government/private-sector part nership to help remove banks’ soured assets from their books. It would also boost an effort to unclog the credit markets that govern loans to consumers and businesses.
“The good news is they are going to spend a trillion dollars; the bad news is they don’t know how,” said James Cox, managing partner at Harris Financial Group.
“They built this up as being a panacea,” he said. “There was so much hope pinned on them to do a good job. The expectations have been so high. It’s hard to live up to.”
But Peter Jankovskis, co- chief investment officer at OakBrook Investments, said the government was right to outline a broad plan rather than putting something together hastily.
“They are doing the right thing by taking their time and not rushing through with bad policy,” Jankovskis said.
Some investors questioned whether the plan, which followed previous efforts in the final months of 2008, would work. Some selling was to be expected, however, as stocks rose sharply last week ahead of the announcement.
The Dow industrials fell 381.99, or 4.62 percent, to 7,888.88. It was the biggest drop for the Dow since Dec. 1, when the blue chips fell 680 points, or 7.7 percent.
Broader stock indicators also tumbled. The Standard & Poor’s 500 index fell 42.73, or 4.91 percent, to 827.16. The Nasdaq fell 66.83, or 4.20 percent, to 1,524.73.
The sell-off was more orderly than many of those seen last fall, and stocks finished off their lows of the session.
Asian markets also reacted with skepticism with a sell-off their own today. Hong Kong’s Hang Seng Index tumbled 3 percent, while South Korea’s Kospi lost 1.4 percent. Japanese markets were closed for a public holiday.
