Wall Street's March rally is on hold after the White House rejected turnaround plans from General Motors Corp. and Chrysler and gave investors an economic reality check.
Major indexes fell about 3 percent Monday, including the Dow Jones industrial average, which lost about 254 points but finished well off its lows. Financial stocks weighed heavily on the market amid worries that banks will need fresh injections of capital.
The Dow tumbled 254.16, or 3.3 percent, to 7,522.02. It was down as much as 339 points, so the market's ability to pull above its lows on light trading volume could signal that investors aren't ready to give up on the rally.
The Standard & Poor's 500 index fell 28.41, or 3.5 percent, to 787.53, while the Nasdaq composite index fell 43.40, or 2.8 percent, to 1,501.80.
With the economy still deeply troubled, some analysts say Wall Street may have gotten ahead of itself.
"I think we had a huge run up ... that was not really justified," said Peter Jankovskis, co-chief investment officer at OakBrook investments. "There are a lot of negatives right now on the horizon."
Bank stocks had rallied on the hope that their first-quarter performance would be better than expected. But Friday, the heads of JPMorgan Chase & Co. and Bank of America Corp. diminished some of those hopes when they said March has not been as good for business as the first two months of the year.
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