Stocks Plummet, as Geithner Underwhelms

Updated from 4:17 p.m. EST

Stocks in New York sold off sharply Tuesday, continuing to slide into the close, as holes in the "Financial Stability Plan" left investors disillusioned and the long-awaited Senate passage of the economic stimulus plan did little to excite the Street.

The Dow Jones Industrial Average fell 381.99 points, or 4.6%, to 7,888.88, and the S&P 500 fell 42.73 points, or 4.9%, to 827.16. The Nasdaq was lessened by 66.83, or 4.2%, at 1524.73.

"Investors were expecting much more and were clearly disappointed, "said Quincy Krosby, chief investment strategist with The Hartford, about Treasury Secretary Geithner's proposal, which she calls "a framework without the details." At these levels, she says, there's no ambiguity on how the market felt about it.

The Dow was a sea of red, as all 30 Dow stocks lost ground, with Bank of America (BAC) in the lead, shedding 19.3% and Citi (C)bleeding 15.2%.

Intel(INTC) provided one promising storyline for the day, a bright spot amid earnings and layoffs news from UBS(UBS) and General Motors(GM), along with data showing U.S. wholesalers cut back on their inventories in December by the largest amount in nearly 17 years.

But the spotlight was on the unveiling of Treasury Secretary Geithner's financial bailout plan, which had previously enticed the market with the possibility of surprise provisions, shaking out some short positions and helping to inspire a rally late last week. But today, it just failed to impress, said Matthew Smith, president of Smith Affiliated Capital.

Among other things, the Treasury Department will establish a Public-Private Investment Fund in conjunction with the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), and the private sector, Geithner said. But it wasn't quite the "bad bank" concept -- a creation to eat up toxic assets that are derailing banks' balance sheets -- that had made water cooler talk.