Wall Street down led by regional banks

NEW YORK, Sept. 22 (Xinhua) — Wall Street dropped sharply Monday after the biggest two-day rally since 1987, as investors worried that regional banks might not benefit from the U.S. government’s bailout plan.

The market soared Friday on the government’s new plan to remove toxic assets from bank’s balance sheet. Investors are closely watching how successful the plan will be in loosening up the credit markets. However, regional banks tumbled after Merrill Lynch said the plan may accelerate credit losses at small and mid-sized banks by forcing them to write down real-estate assets.

Investors also digested stunning corporate news. Late Sunday, the Federal Reserve approved Goldman Sachs and Morgan Stanley, the last two major investment banks on Wall Street, to transform to bank holding companies. That will allow the companies to set up commercial banks that will be able to take deposits.

Meanwhile, Mitsubishi UFJ, Japan’s largest bank, agreed to buy 10 percent to 20 percent of Morgan Stanley. Morgan Stanley rallied over 8 percent in morning trading.

In addition, Microsoft Corp. plans to buy back 40 billion U.S. dollars in stock and raise its dividend. Standard & Poor’s gave its highest possible rating to Microsoft, the first company to get the AAA rating in a decade. Microsoft rose nearly 4 percent.

Light, sweet crude for October delivery rose 4.62 dollars to 109.17 U.S. dollars a barrel on the New York Mercantile Exchange, which weighed on airlines and automakers.

The Dow Jones fell 192.43 to 11,196.01. Broader indexes also moved lower. The Standard & Poor’s 500 index dipped 25.37 to 1,229.71 and the Nasdaq fell 44.01 to 2,229.89