On Monday, the Dow Jones Industrial Average plunge more then 500 points, the most since September 17, 2001 and worst percentage drop since July 19, 2002 after Lehman Brothers Holdings Inc. filed for bankruptcy and American International Group Inc. efforts to raise $70 billion to replenish capital.

The Dow lost 504.48 points, or 4.4%, to close at 10,917.51. The S&P 500 shed 59.01 points, or 4.7%, to 1,192.69, with financials and energy fronting the losses, which hit all of the index’s 10 industry groups. The Nasdaq Composite Index fell 81.36 points, or 3.6%, to 2,179.91.

The decline was fueled by a series of weekend news events that will continue to cast ripples through the financial services industry for years to come. Two of the major Wall Street institutions disappeared overnight, Lehman collapsed in bankruptcy and Merrill Lynch fell into the stronger arms of suitor Bank of America in a $50 billion deal.

Anxiety will be carried over to today’s trading session, as global markets reaction will fall back on Wall Street’s turmoil. Another big worry now is AIG, which was downgraded on Monday night by Moody’s and S&P, will makes its pursuit for financing even more desperate.

The increased possibility of an interest rate cut at today’s FOMC meeting as well as in the months ahead and Goldman’s third-quarter earnings release may help to set the early tone in a very sloppy market open. Goldman is said to be the cream, the strongest of the Wall Street firms.

“My first rule - the golden rule - ensures that over the economic cycle the Government will borrow only to invest, and that current spending will be met from taxation” - Gordon Brown

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