The Dow Jones Industrial average was down nearly 2 percent on Wednesday as commodities and financial stocks fell following President Barack Obama’s announcement that he would seek further restrictions for big banks.

Nine of the 11 stocks were either financial or commodities related firms.

The 11 biggest losers of the S&P 500, which was also down nearly 2 percent, were Total System Services, Legg Mason, Freeport-McMoran, Massey Energy, AK Steel, Cliffs Natural Resources, US Steel, Peabody Energy, Eastman Kodak, Titanium Metals, PNC, and JPMorgan.

The Dow Jones U.S. Financials Index is down 2.77 percent on President Barack Obama’s proposal to further curb big banks. The proposal will limit the trading activities of financial institutions involved in retail banking. These institutions will not be permitted to own, invest, or sponsor hedge funds, private equity funds, and proprietary trading operations unrelated to serving their clients.

The proposal will also further limit the market share of customer deposits for big banks. Obama stated in a press release that he wants to end the mentality of “Too Big to Fail.”

This proposal followed a series of moves by governments to restrict bank activities. The Chinese government announced a 50 basis point hike in reserve requirements last Tuesday and restricted big bank lending for the rest of January.

Although the Obama administration is not directly withdrawing liquidity, it may achieve a similar effect through its taxes, fees, and restrictions. Obama recently proposed the “financial crisis responsibility fee” for banks, which amounts to 0.15% of covered liabilities.

According to NYU Stern Professor Anthony Marciano, the bank fee essentially has a deleveraging effect on big banks. Through fees and restrictions, Obama may be indirectly withdrawing liquidity in the financial system.

Commodities stocks continue to lead the decline. The Dow Jones U.S. Basic Materials Index is down 3.37 percent while the Dow is down 1.94 percent to trade at 10,397.14. News of continued Chinese tightening yesterday sparked renewed fears that reduced infrastructure spending will reduce demand for commodities.

Freeport-McMoRan, a copper and gold company, is down 7 percent even though it reported earnings this morning that beat Wall Street expectation. Massey Energy is down 7.8 percent, AK Steel is down 8.16 percent, and Cliffs Natural Resources is down 7.08 percent.

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