U.S. Stock-Index Futures Tumble on Lehman; AIG, JPMorgan Fall

Allen Wan and Adria Cimino
Monday, Sept 15, 2008

U.S. stock-index futures tumbled on concern Lehman Brothers Holdings Inc.'s bankruptcy filing will exacerbate credit-market turmoil.

Lehman, once the fourth-largest U.S. investment bank, has filed a Chapter 11 petition after potential buyers abandoned talks and the U.S. government declined to fund a takeover of the crippled firm. Bank of America Corp. cemented its status as the largest U.S. consumer bank by agreeing to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for about $50 billion.

Standard & Poor's 500 Index futures expiring in December retreated 46.20 points, or 3.7 percent, to 1,212.4 at 9:58 a.m. in London. Stocks in Australia dropped and U.S. Treasuries rose the most since January as investors sought the relative safety of government debt.

``The collapse of this deal casts a dark cloud over Wall Street,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``It also sends a message that the government is getting out of the bailout business and makes financial institutions like AIG and WaMu look even more vulnerable.''

American International Group Inc., the largest U.S. insurer, plunged 46 percent last week and Washington Mutual Inc., the country's biggest savings and loan, dropped 36 percent on concern about their financial health.

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