Stocks Surrender Gains, Close With Minor Losses

Updated from 4:09 p.m. EDT

Stocks on Wall Street finished a see-saw day with modest losses Tuesday after the Treasury Department outlined a plan to invest $250 billion in U.S. banks.

The Dow Jones Industrial Average, which traded up more than 400 points in the morning and down nearly 300 points in the afternoon, finished with a loss of 76.62 points, or 0.8%, at 9310.99. The S&P 500 closed down 5.34 points, or 0.5%, at 998.01. The Nasdaq gave back 65.24 points, or 3.5%, at 1779.01.

Ahead of Tuesday's session, Treasury Secretary Henry Paulson said his agency would dedicate $250 billion of the $700 billion bailout package to buying equity positions in U.S. banks.

Of that $250 billion, the government would use about $125 billion to buy preferred shares in Goldman Sachs (GS Quote), Morgan Stanley (MS Quote), JPMorgan Chase (JPM Quote) , Bank of America (BAC Quote), Merrill Lynch (MER Quote) , Citigroup (C Quote), Wells Fargo (WFC Quote), Bank of New York Mellon (BK Quote) and State Street (STT Quote), The Wall Street Journal reported.

Speaking in Washington Tuesday morning, Paulson said he dislikes government ownership in U.S. financial firms but the equity investment will help unfreeze liquidity markets and alleviate the crisis. Paulson stressed that the capital infusions should be circulated rather than kept by banks.

Federal Reserve Chairman Ben Bernanke praised Paulson's plan, and FDIC Chair Sheila Bair said that additional insurance of deposits in banks would also boost confidence in the financial system.

The financial sector was broadly rising, as the Financial Select Sector SPDR (XLF Quote), which tracks the space, gained 6% to $17.25. The AmEx Securities Broker/Dealer Index jumped 2.8% to 107.44, and the KBW Bank Index added 12% to 62.30.