4:15PM EST: U.S. stocks fell, sending the S&P500 Index to its biggest drop since Barack Obama’s inauguration, while Treasuries rallied and the dollar rose on skepticism that the government’s bank rescue will work.

Investors are frustrated with the government’s latest bank bailout plan – and showing it by unloading stocks. The major stock indexes fell as much as 5 percent Tuesday, including the Dow Jones industrial average, which tumbled 400 points.

Financial stocks led the market lower, reflecting Wall Street’s growing concerns about the government’s ability to restore the health of the banking industry.

Bank of America Corp. and Citigroup Inc. slipped more than 16 percent after Treasury Secretary Timothy Geithner said he’s still “exploring a range of different structures” to bail out lenders. Principal Financial Group Inc. plunged 32 percent on concern the life insurer needs more capital. Alcoa Inc. slumped 11 percent after S&P cut the aluminum producer’s credit rating to the lowest investment grade. Only seven S&P 500 stocks rallied.

According to preliminary calculations, the Dow industrials fell 385.18, or 4.66 percent, to 7,885.69.

Broader stock indicators also tumbled. The Standard & Poor’s 500 index fell 42.11, or 4.84 percent, to 827.78, and the Nasdaq fell 62.78, or 3.94 percent, to 1,528.78. The Russell 2000 index of smaller companies fell 21.91, or 4.68 percent, to 446.03.

Geithner pledged up to $2 trillion in government financing for programs aimed at spurring new lending and addressing banks’ toxic assets. The plan, which he said will “take time” to bear fruit, includes limits on bank dividends and acquisitions.

(Source: FOX / CBS / MSNBC / Bloomberg)