NEW YORK — The dawn of the Obama presidency could not shake the stock market from its dejection over the rapidly deteriorating state of the banking industry.

NEW YORK — The dawn of the Obama presidency could not shake the stock market from its dejection over the rapidly deteriorating state of the banking industry.

Financial stocks, many of them falling by double digit percentages, led a huge drop on Wall Street Tuesday that left the major indexes down more than 4 percent and the Dow Jones industrials down 332 points. Although traders on the floor of the New York Stock Exchange paused to watch the inauguration ceremony and Obama's remarks, the transition of power didn't erase investors' intensifying concerns about struggling banks and their impact on the overall economy.

The market's angst, which began with multibillion dollar losses reported last week by Bank of America Corp. and Citigroup Inc., intensified after the Royal Bank of Scotland's forecast that its losses for 2008 could top $41.3 billion.

The collapse in bank stocks was swift: State Street Corp. plunged 59 percent, Citigroup fell 20 percent and Bank of America lost 29 percent. Royal Bank of Scotland fell 69 percent in New York trading.

"The reason we're having a panic drop is the fact that Europe is catching our cold, and we could have deeper and deeper problems that could require more and more money. And eventually the government is going to have to stop spending," said Keith Springer, president of Capital Financial Advisory Services. "It's a pretty dangerous situation to be in."

The market's retreat Tuesday means Wall Street has eaten through most of the advance it made from Nov. 20 through Jan. 6. The S&P 500, which had been up as much as 24 percent, is now up only 7 percent from its November low.

Fears about banking eclipsed the shift in Washington, D.C. Royal Bank of Scotland's forecast for what would be the biggest loss ever for a British corporation left investors fearful that government's would have to nationalize banks to keep them from collapsing. The British government injected more money into the struggling bank Monday and announced another round of bailouts for the country's banks.

State Street and Regions Financial Corp., a bank with branches primarily in the Southeast, both reported big earnings drops Tuesday.