Stocks on Wall Street fell sharply on Monday after Lehman Brothers Holdings Incorporated announced bankruptcy and investors nervously watched American Insurance Group (AIG), which has sought emergency funds from the Federal Reserve. The collapse of Lehman Brothers, an outcome the U.S. government hoped to avoid but was ultimately unwilling to wholly prevent, sent stocks down over 300 points in the Dow Jones. But investors were also relieved to see that Merrill Lynch & Company found a buyer in Bank of America. The deal, in which Bank of America will receive $50 billion in stock, helped the market begin to recover slightly in midday trading. The Lehman Brothers collapse nonetheless registered across the global markets, and caused many to question where the effects of the mortgage crisis would manifest next. Investors are worried that AIG's woes and the Lehman bankruptcy filing will spark a series of further collapses or write downs. In midday trading, the Dow fell 256.72, or 2.25 percent, to 11,165.27 after falling nearly 350 points seen in the early part of the session. Broader stock indicators also fell. The Standard & Poor's 500 index fell 31.24, or 2.50 percent, to 1,220.46, and the Nasdaq composite index fell 38.08, or 1.68 percent, to 2,223.19. Meanwhile, the Lehman bankruptcy help oil prices head south as investors bet that the financial troubles would mean a big liquidation of commodities holdings. Prices dropped as much as $7 over the weekend, helped in part by signs that Hurricane Ike delivered less damage than feared to the Gulf Coast energy oil and gas infrastructure. Light, sweet crude for October delivery fell $3.57, or 3.53 percent, to $97.61 a barrel on the New York Mercantile Exchange, after earlier dropping to $94.13, the lowest level since February 14.
