The bad news coming from both the financial and corporate sectors underlined the broadening of a crisis that claimed its first victims among banks and insurers but has now spread to the rest of the global economy.
The poor performance of sectors ranging from insurance to logistics, and the announcement that the electronics retailer Circuit City had filed for bankruptcy protection, reversed early gains and sent major stock indexes lower. Both the Dow Jones Industrial Average and the S&P500 were down more than 1 per cent at 1pm in New York.
The equity market's fall came despite a 10 per cent jump in the shares of AIG, after the insurer confirmed details of a new $150bn government bail-out package.