Wednesday February 25, 2009, 1:00 pm EST
By Rodrigo Campos
NEW YORK (Reuters) - Stocks fell on Wednesday as President Barack Obama's first address to Congress shed little new light on how he plans to stabilize the economy and shore up banks, and gloomy home sales data fed the negative sentiment.
Obama said in his speech on Tuesday night the United States would emerge stronger from the ongoing crisis, but investors found little in what he said to spur buying after the market's rebound on Tuesday from 1997 lows.
"He gave a very good speech in terms of making the citizens feel better about some of the things going on, but there is still a lot of work to be done," said Tim Smalls, head of U.S. stock trading at brokerage Execution LLC in Greenwich, Connecticut.
The housing data "is another dose of reality," he added.
Sales of previously owned U.S. homes plunged by a greater than expected 5.3 percent in January, an industry group reported.
Shares of financial services companies and big manufacturers led the market lower. Boeing (NYSE:BA - News) and IBM (NYSE:IBM - News) were the top drags in the Dow, with declines of 6 percent and 2.5 percent respectively. The S&P financial index (^GSPF - News) fell 4.4 percent.
The Dow Jones industrial average (DJI:^DJI - News) dropped 152.77 points, or 2.08 percent, to 7,198.17. The Standard & Poor's 500 Index (^SPX - News) slipped 15.98 points, or 2.07 percent, to 757.16. The Nasdaq Composite Index (Nasdaq:^IXIC - News) shrunk 32.24 points, or 2.24 percent, to 1,409.59.
The slide marked a major setback after Tuesday's attempted rebound from 12-year lows hit a day earlier.
On Nasdaq, shares of First Solar (NasdaqGS:FSLR - News) , a maker of thin-film solar modules, fell about 21 percent to $108.81 after the company gave a bleak short-term outlook for the industry.
Financial shares made a short comeback after Federal Reserve Chairman Ben Bernanke said in his second day of congressional testimony that regulators were not planning to nationalize Citigroup.
Shares of Citigroup (NYSE:C - News), down more than 60 percent year-to-date, briefly turned positive but later dropped 5 percent. The KBW bank index (Philadelphia:^BKX - News) fell 4 percent.
Shares of Lincoln National Corp. (NYSE:LNC - News) fell more than 19 percent after the company slashed its dividend more than 95 percent. The S&P Life Insurance index (^GSPLIFE - News) dropped 9 percent.