New York stocks made landslide losses on Monday with Dow Jones shedding more than 500 points, as the U.S. financial turmoil battered investors' confidence in the health of economy.
Lehman Brothers, the fourth biggest U.S. investment bank, filedfor bankruptcy Monday after two most serious buyers Barcklays and Bank of America (BOA) withdrew from talks to buy the firm. New York-based Lehman, the biggest U.S. underwriter of mortgage securities, has lost 94 percent of its market value this year after record losses from investments tied to mortgages.
Meanwhile, Lehman's rival, the third largest U.S. investment bank Merrill Lynch reached a 50-billion-dollar deal to sell itselfto BOA under the pressure of regulators. Shares of Merrill Lynch tumbled more than 35 percent last week and closed at 17.05 dollarslast Friday.
American International Group (AIG), the largest U.S. insurer, is another big financial giant affected by the Lehman. AIG refusedprivate equity infusion and turned to the Federal Reserve for help.The New York Federal Reserve held meetings on Monday on the situation AIG with representatives of the Treasury Department, financial services firms and state officials. AIG's shares tumblednearly 50 percent in morning trading.
Three of five largest U.S. investment banks failed within six months, including Bear Stearns, Lehman Brothers and Merrill Lynch.These historic events triggered panic among investors about another series of troubles for banks and financial institutions that may be forced to further write down debt assets.
Moreover, a sharp drop in oil also weighed on energy stocks. Light, sweet crude dropped 5.47 dollars to settle at 95.71 dollarsa barrel on the New York Mercantile Exchange as Hurricane Ike has left Gulf refineries without major damage.
The Dow Jones slid 504.48 to 10,917.51. Broader indexes also plunged. The Standard & Poor's 500 index tumbled 59.01 to 1,192.69 and the Nasdaq lost 81.36 to 2,179.91.
(Xinhua News Agency September 16, 2008)
