Wall Street stocks plunged to their lowest close in nearly 12 years on investor disappointment with the latest plan from Washington to prop up the ailing US banking system.
The Dow Jones Industrial Average sank 250.89 points (3.41 percent) to 7,114.78, crashing below its November bear market low and hitting its lowest close since May 1997.
The blue-chip index has fallen by nearly half since its record in October 2007 of 14,198.10.
The broad-market Standard & Poor's 500 index shed 26.72 points (3.47 percent) to 743.33, its lowest finish since April 1997.
The tech-heavy Nasdaq composite slid 53.51 points (3.71 percent) to 1,387.72, its lowest level since November 2008.
Market action came as US authorities unveiled plans for a "capital buffer" for ailing banks but said the programme would seek to avoid nationalisation.
A joint statement from the US Treasury, Federal Reserve and banking regulators said the new lifeline being offered could lead to bigger government stakes but with a "strong presumption" that banks "remain in private hands."
"The government's reassurances contributed to an early morning rally, but the buying mood didn't last long," said Elizabeth Harrow at Schaeffer's Investment Research.
Marc Pado, a stock analyst at Cantor Fitzgerald, said the market had hoped for more clarity on the Obama administration's plan to rescue the banking system.
"The market is still having trouble with the idea that we're not getting the clarity that its needs for the financial system," he said.
"It's good news for the banks that the government is saying that they approved more bailout funds, but that's not a plus for the market that the banks need bailout funds."
Some key banking shares rose on the news but the overall market sank amid growing fears that the financial system would remain hobbled, stifling economic growth.
"The 'no nationalisation' talk failed to help keep the broad market afloat," said Jon Ogg at 24/7 Wall Street.
"The breath of relief was quickly replaced by more flight," he said.
"It feels as though the rest of the air is coming out of the market as Joe Public throws in the towel."
Tech shares weakened on economic fears, with Hewlett-Packard off 6.27 percent at 29.28 dollars and IBM down 4.98 percent at 84.37.
General Electric slumped 5.65 percent to 8.85 dollars after Deutsche Bank analysts said it used a presumption that the GE financial services arm would have to be valued at "zero" due to the credit crisis.
In the banking sector, Citigroup rallied 9.74 percent to 2.14 in a positive reaction to reports that the government could boost its stake in the troubled giant to up to 40 percent to avert its collapse.
Bank of America rose 3.17 percent to 3.91 dollars.
Ailing auto giant General Motors ended unchanged at 1.77 dollars following reports that advisors of US Treasury have started lining up tens of billions of dollars in bankruptcy financing for it and Chrysler.
Ford surged 9.5 percent to 1.73 dollars after it reached an agreement with the United Auto Workers union on changes to pension benefits of workers.
Bonds were mixed. The yield on the 10-year US Treasury bond rose to 2.777 percent from 2.772 percent on Friday while that on the 30-year bond dropped to 3.525 from 3.565 percent.
The Dow Jones Industrial Average sank 250.89 points (3.41 percent) to 7,114.78, crashing below its November bear market low and hitting its lowest close since May 1997.
The blue-chip index has fallen by nearly half since its record in October 2007 of 14,198.10.
The broad-market Standard & Poor's 500 index shed 26.72 points (3.47 percent) to 743.33, its lowest finish since April 1997.
The tech-heavy Nasdaq composite slid 53.51 points (3.71 percent) to 1,387.72, its lowest level since November 2008.
Market action came as US authorities unveiled plans for a "capital buffer" for ailing banks but said the programme would seek to avoid nationalisation.
A joint statement from the US Treasury, Federal Reserve and banking regulators said the new lifeline being offered could lead to bigger government stakes but with a "strong presumption" that banks "remain in private hands."
"The government's reassurances contributed to an early morning rally, but the buying mood didn't last long," said Elizabeth Harrow at Schaeffer's Investment Research.
Marc Pado, a stock analyst at Cantor Fitzgerald, said the market had hoped for more clarity on the Obama administration's plan to rescue the banking system.
"The market is still having trouble with the idea that we're not getting the clarity that its needs for the financial system," he said.
"It's good news for the banks that the government is saying that they approved more bailout funds, but that's not a plus for the market that the banks need bailout funds."
Some key banking shares rose on the news but the overall market sank amid growing fears that the financial system would remain hobbled, stifling economic growth.
"The 'no nationalisation' talk failed to help keep the broad market afloat," said Jon Ogg at 24/7 Wall Street.
"The breath of relief was quickly replaced by more flight," he said.
"It feels as though the rest of the air is coming out of the market as Joe Public throws in the towel."
Tech shares weakened on economic fears, with Hewlett-Packard off 6.27 percent at 29.28 dollars and IBM down 4.98 percent at 84.37.
General Electric slumped 5.65 percent to 8.85 dollars after Deutsche Bank analysts said it used a presumption that the GE financial services arm would have to be valued at "zero" due to the credit crisis.
In the banking sector, Citigroup rallied 9.74 percent to 2.14 in a positive reaction to reports that the government could boost its stake in the troubled giant to up to 40 percent to avert its collapse.
Bank of America rose 3.17 percent to 3.91 dollars.
Ailing auto giant General Motors ended unchanged at 1.77 dollars following reports that advisors of US Treasury have started lining up tens of billions of dollars in bankruptcy financing for it and Chrysler.
Ford surged 9.5 percent to 1.73 dollars after it reached an agreement with the United Auto Workers union on changes to pension benefits of workers.
Bonds were mixed. The yield on the 10-year US Treasury bond rose to 2.777 percent from 2.772 percent on Friday while that on the 30-year bond dropped to 3.525 from 3.565 percent.
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