Merrill, the world's biggest brokerage, fell to a two-year low after posting its first quarterly loss since 2001. Lehman Brothers Holdings Inc. and Bear Stearns Cos. also dropped. Amazon.com Inc., whose shares topped $100 yesterday for the first time in almost eight years, slumped the most since July 2006 on a profit forecast that may miss some analysts' estimates.
The Standard & Poor's 500 Index lost 8.17, or 0.5 percent, to 1,511.42 at 9:36 a.m. in New York. The Dow Jones Industrial Average retreated 44.22, or 0.3 percent, to 13,632.01. The Nasdaq Composite Index slid 26.85, or 1 percent, to 2,772.41.
Credit-market losses have caused third-quarter profits to decline by an average 14 percent for financial companies in the S&P 500, the worst performance among 10 industries, according to Bloomberg data as of yesterday. Merrill's $7.9 billion writedown is the highest of any Wall Street firm.
Stocks also fell today after a lawmaker of Turkey's governing party said the country is bombing units of the Kurdistan Workers' Party, or PKK, in northern Iraq and sent troops across the border.
Lehman, the largest U.S. underwriter of mortgage bonds, declined $1.29 to $56.98. Bear Stearns, the second-biggest U.S. mortgage-bond underwriter, fell $1.36 to $114.80.
Amazon.com sank $11.62, or 12 percent, to $89.20. Fourth- quarter operating income will be between $221 million and $291 million, the world's largest Internet retailer said yesterday. Scott Tilghman, an analyst at Soleil Securities Corp., estimated profit of $278.5 million.