Source : Reuters

Stocks plunged on Tuesday afternoon — shedding 200 points in the final hour of trading alone — despite reassurances from the chairman of the Federal Reserve, Ben S. Bernanke, that the central bank was prepared to lower interest rates, words that many investors had said they were waiting to hear.

“You are getting all the things that you would think the equity markets would respond very favorably to,” Steve Sachs, director of trading at Rydex Investments, said. “But at this point it just doesn’t seem to be doing it. It’s the attitude of “Sell” — regardless of what the news is.”

The Dow Jones industrial average, which had lumbered downward from early in the session, accelerated its losses in the final hour and ended down 508.39 points, breaking below the 9,500 mark to close at 9,447.11.

The broader Standard & Poor’s 500-stock index fell by 5.7 percent, ending below 1,000 for the first time in five years.

Shares of banks and real estate firms shouldered the biggest losses, with Bank of America, Merrill Lynch and Morgan Stanley all losing about 25 percent.

Morgan Stanley was plagued by rumors on trading desks that a financing deal with a Japanese bank had fallen through; officials at Morgan quickly moved to reassure investors that the deal was in fact still on track.

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By MICHAEL M. GRYNBAUM

David Jolly, David Stout and Bettina Wassener contributed reporting.