U.S. stocks fell for a second day Tuesday with increasing speculation that Lehman Brothers Holdings Inc. will be forced to raise more capital led a slump in financial shares.

Lehman, the fourth-biggest U.S. securities firm, slid below its lowest closing level since 2003 on concern it may report its first ever quarterly loss. Wachovia Corp., the fourth-largest U.S. bank, dropped the most since April after a report showed the billionaire investor Michael Price is betting the stock will drop.

In the energy sector, Exxon Mobil Corp. and Chevron Corp. led shares lower as oil retreated for the first time in three days.

The Standard & Poor's 500 Index declined 12.31 points, or 0.9 percent, to 1,373.36 at 2:39 p.m. in New York. The Dow Jones Industrial Average slipped 128.97, or 1 percent, 12,374.85. The Nasdaq Composite Index lost 25.67, or 1 percent, to 2,465.86.

Lehman dropped $4.20, or 12 percent, to $29.63 for the steepest decline in the S&P 500. The firm may report its first quarterly loss since going public in 1994, increasing pressure on the company to raise more capital, according to analysts.

Wachovia declined $1.68, or 7.2 percent, to $21.72, driving the S&P 500 Banks Index to the largest drop among two dozen industry groups.

On Monday, U.S. equities ended sharply lower, breaking a four-session win streak, with the Dow industrials falling by triple digits after Standard & Poor's cut its ratings on three large brokerages.