New York: As Lehman Brothers Holdings Inc.'s bankruptcy and declining commodities increased speculation that credit-market losses and the economic slowdown will worsen, U.S. stocks tumbled.
The US stocks plunged to new bear-market lows overnight and the Dow Jones Industrial Average had its biggest point-decline in recent times.
The Standard & Poor's 500 Index has slipped to the steepest drop since the September 11 terrorist attacks in 2001.
The MSCI World Index of developed-market equities slumped the most in six years, the steepest since September11, 2001.
Shocked over the failure of Lehman Brothers and the rushed merger of Merrill Lynch raised fears about other distressed financial firms, including American International Group (AIG) and Washington Mutual too.
The impact of the bankruptcy news and the general slide in economy has left the dollar weakened the most against the yen in a decade.
Lehman Brothers declared bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks on Monday and the company lost 94 per cent of its market value this year.
Lehman Brothers sank 94 per cent to 21 cents.
Goldman Sachs Group fell 12 per cent to $135.50. That is considered the most since April 2000. JPMorgan Chase & Co. has slid 10 per cent to $37.
Their shares were downgraded by Merrill Lynch.
Some investors said Lehman's failure may allow financial markets to rebound and the markets would rally by mid-October.
European and Asian stocks slumped were affected too. The effect was due to concern over turmoil in the U.S. banking industry and speculation that it will infect financial institutions and economies abroad.
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