Wall Street ends lower on concerns over Lehman

NEW YORK — Stocks tumbled Tuesday after fresh worries about the stability of Lehman Brothers Holdings Inc. touched off renewed jitters about the overall financial sector. Broad indexes including the Standard & Poor's 500 lost more than 3 percent while the Dow Jones industrials fell 2.4 percent, nearly 300 points.

Bond prices jumped as investors sought the safety of government debt.

Wall Street's pullback comes a day after the biggest single-session rally in a month in the Dow so some retrenchment might have been expected. But it was worries about Lehman that punctured a sense of optimism about the financials.

Investors had been hopeful about the sector after the Treasury Department announced Sunday it would seize control of mortgage finance companies Fannie Mae and Freddie Mac in an effort to help stabilize the troubled housing market.

But worries about Lehman regained investors' attention. Shares of the No. 4 U.S. investment bank lost nearly half their value Tuesday amid concern the company is having trouble finding fresh sources of capital. Media reports said a possible investment from South Korea's government owned Korea Development Bank was in doubt.

Many financial companies, including Lehman, have struggled with souring mortgage debt on their books and have looked to outside sources of funding to shore up their balance sheets.

"We're back to the fundamentals again," said Denis Amato, chief investment officer at Ancora Advisors in Cleveland, referring to investors' mentality a day after sending stocks higher. "These financial maneuverings don't create prosperity," he said of the government's steps to aid Fannie and Freddie. "Just because you make some financial change doesn't mean all of a sudden the economy gets better."

According to preliminary calculations, the Dow fell 280.01, or 2.43 percent, to 11,230.73.

Broader indexes also fell. The Standard & Poor's 500 index declined 43.28, or 3.41 percent, to 1,224.51 and the Nasdaq composite index fell 59.95, or 2.64 percent, to 2,209.81.