Wall Street Slides on Obama Banks Plan

A drop in financial shares pounded the stock market after President Barack Obama proposed greater restrictions on big banks.

The Dow Jones industrial average tumbled 213 points after dropping 122 on Wednesday. The index has seen four straight triple-digit moves and the latest slide erased the Dow's gains for 2010. Bond prices rose as the stock market became more volatile.

Tightening the rules on risk-taking and trading at banks could hurt profits at those companies. Obama said he would seek to limit the size and complexity of large financial companies so that a bank's collapse wouldn't endanger the overall financial system.

The move could mean changes for how big financial institutions like Bank of America, Citigroup Inc. and JPMorgan Chase & Co. are structured. Each of the stocks fell more than 4 percent.

Weakness in manufacturing also brought concern that the economy might not be recovering as quickly as hoped. The Philadelphia Federal Reserve said manufacturing in its region fell in January from December. Its index of regional manufacturing conditions fell to 15.2 from a revised 22.5 last month.

Another test for the market could come Friday. Google Inc. posted a fivefold jump in its fourth-quarter profit after the closing bell on double-digit revenue growth, but the results fell short of expectations. The stock fell $27.40, or 4.7 percent, to $553.01 in after-hours electronic trading after edging up 0.4 percent in regular trading.

Patrick Galley, chief investment officer at RiverNorth Capital in Chicago, said stocks have risen so fast in the past 10 months that expectations about an economic recovery are getting too high.

"The market can be quite fickle just because of the huge run-up that we've had," he said. "A lot of folks have their trigger finger on the sell button if they start to sense that news won't meet expectations."

According to preliminary calculations, the Dow fell 213.27, or 2 percent, to 10,389.88, its biggest drop since Oct. 30. The index hasn't closed with triple digit moves in four straight trading days since May 6-11.

The broader Standard & Poor's 500 index fell 21.56, or 1.9 percent, to 1,116.48. The Nasdaq composite index fell 25.55, or 1.1 percent, to 2,265.70.