U.S. stocks dropped at the open on Monday after the Federal Reserve cut its discount interest rate at an emergency meeting and JP Morgan Chase & Co. agreed to buy Bear Stearns Cos. for $2 a share, fueling fears that the global credit crisis is spiraling out of control.
The Dow Jones industrial average fell 106.16 points, or 0.89 percent, to 11,844.93. The Standard & Poor's 500 Index slid 16.80 points, or 1.30 percent, to 1,271.34. The Nasdaq Composite Index tumbled 29.63 points, or 1.34 percent, to 2,182.86.
Bear Stearns shares fell $26.44 to $3.56.
The Fed lowered the rate on direct loans to commercial banks by 25 basis points to 3.25 percent as it moved to ease tension in financial markets after the collapse of Bear Stearns and more than $195 billion in asset writedowns and credit losses worldwide.
The action coincided with JPMorgan buying Bear Stearns for about $236 million, less than a 10th of its value last week.
Global stock markets lost $2.4 trillion in market value from a peak in October as of March 14. That partly reflects the slump in the U.S. dollar.
The dollar weakened to as low as 95.76 yen, a level not seen since August 1995, from 99.09 on March 14