American stocks tumbled the most in a month as investors speculated the Federal Reserve’s quarter-point interest-rate cut will fail to prevent a recession.

Bank of America Corp. and Citigroup Inc. led all 93 companies in the S&P 500 Financials Index lower, and homebuilder shares fell the most ever, after the Fed said the housing slump is getting worse. Washington Mutual Inc., the largest American savings and loan, posted its steepest drop in a month on plans to write down the value of its home-lending unit. Freddie Mac, the second-biggest mortgage-finance company, slid for a third day after forecasting a wider loss than analysts estimated.

The S&P 500 lost 38.31, or 2.5%, to 1,477.65. The Dow Jones Industrial Average retreated 294.26, or 2.1%, to 13,432.77. The Nasdaq Composite Index decreased 66.6, or 2.5%, to 2,652.35. Almost 14 stocks declined for every one that rose on the New York Stock Exchange. Treasuries rallied the most in more than three years and the dollar weakened against the yen. “It should have been more aggressive,” the chief investment strategist at the Hartford in Hartford, Conn., Quincy Krosby, said. “The market’s instinctive reaction is that it’s too little too late and that the Fed is behind the curve.” Some investors had expected the Fed to do more to preserve the economy’s six-year expansion. Before the central bank’s announcement, futures trading showed 36% odds of a half-point reduction to 4%, up from 28% yesterday. The central bank also reduced the discount rate it charges banks for direct loans by a quarter percentage point to 4.75%.

The S&P 500’s decline was the second-biggest retreat following a Fed meeting since 1990. The largest rout followed the Fed’s meeting on September 17, 2001, according to Bespoke Investment Group. Bank of America fell $1.99 to $44.65. Citigroup tumbled $1.54 to $33.23. Wells Fargo lost $1.87 to $30.77. The S&P 500 Financials Index slumped 4.9%, the most since November 7.