U.S. Stocks Plunge as Banks Decline

Wall Street began June in the red, falling for the first time in five days, as the Dow quickly lost more than 100 points Monday morning on more worries about the financial sector after Wachovia Corp. ousted its chief executive.

Wachovia tumbled to the lowest level since 1995 after announcing Chief Executive Officer Kennedy Thompson will step down following losses that cost the fourth-largest U.S. bank more than half its market value. Wachovia fell 85 cents to $22.95.

Meanwhile, Washington Mutual separated its chairman and CEO roles, promoting Stephen Frank to chairman as of July 1. Kerry Killinger will stay on as CEO. The banks stock price has lost a third of its value in 2008 and nearly 80 percent over the past year.

As of 11:14 a.m. EDT, the Dow Jones Industrial Average lost 139.63 points, or 1.10 percent to 12,498.69, the Standard & Poor's 500 index slid 12.96 points, or 0.93 percent, to 1,387.42 and the Nasdaq Composite Index dropped 30.63 points, or 1.24 percent, to 2,491.50.

Also in the financial sector, Lehman Brothers Holdings Inc. dropped 89 cents to $35.92 after Merrill lowered its recommendation on the fourth-biggest U.S. securities firm to underperform'' from neutral,'' citing the potential for writedowns on the firm's ``illiquid'' securities. Lehman has tumbled 45 percent in New York trading this year.

Citigroup, the biggest U.S. bank by assets, fell 30 cents to $21.59. Bank of America, the second-largest, lost 45 cents to $33.57. JPMorgan, the third-biggest, fell 50 cents to $42.50.

Economic reports released today beat expectations but still signaled trouble ahead for the economy. The Institute of Supply Management's manufacturing index rose to 49.6 in May, up from 48.6 in April. Economists had expected a decline to 48. Still, a reading of 50 or below indicates contraction in the sector.

The government also reported U.S. construction spending fell 0.4 percent in April following a revised 0.6 percent drop in March.

The dollar was mixed against major currency rivals and the price of gold gained.

U.S. stocks finished with gains last week as oil prices dropped from highs of $135 a barrel.