US STOCKS-Market slides on financial jitters, Lehman drops
(Updates to late afternoon)
* Stocks fall on report Lehman may need to raise capital
* Report on Lehman raises fears of credit crisis effects
* Tyson Foods shares drop on bird flu news
NEW YORK, June 3 (Reuters) - U.S. stocks fell for a second day on Tuesday after reports Lehman Brothers may have to raise more capital added to concerns that there may be another round of big losses in the financial sector from the credit crisis.
Fears in the financial shares contributed to a big move out of stocks and into safe-haven government bonds. Lehman Brothers LEH.N fell as much as 14 percent, to their lowest level since the meltdown of Bear Stearns in March, on worries that Wall Street's smallest surviving brokerage may need fresh capital. The Wall Street Journal reported Lehman was considering raising as much as $4 billion.
The nervous mood was exacerbated in early afternoon when Tyson Foods (TSN.N) said it was eradicating chicken flock exposed to a mild strain of bird flu [ID:nN03385829]. Shares of Tyson, the biggest U.S. producer of chicken, beef and pork, fell more than 7 percent.
Shares of General Motors GM.N erased earlier gains, after the automaker said U.S. auto sales fell 30.2 percent in May, led by a decline in truck sales. Earlier, GM shares had risen as much as 4 percent after it announced a reorganization plan.
"There's a broad sense in the market that some of the brokers need to raise capital imminently, sooner than thought," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
The Dow Jones industrial average .DJI fell 130.03 points, or 1.04 percent, to 12,373.79. The Standard & Poor's 500 Index .SPX slid 10.93 points, or 0.79 percent, to 1,374.74. The Nasdaq Composite Index .IXIC was down 20.02 points, or 0.80 percent, at 2,471.51.
Earlier, stocks had risen after a factory orders report brightened the view of the U.S. manufacturing sector and as Federal Reserve Chairman Ben Bernanke said U.S. interest rates were at the right level for an economy facing both price pressures and threats to growth. The dollar rallied after Bernanke spoke, which triggered a fall in the price of oil of around 3 percent, helping energy-sensitive sectors like airlines.
An airline index .XAL rose 2.7 percent.
Lehman shares fell 9.3 percent to $30.69 on the New York Stock Exchange. A source familiar with the matter told Reuters that Lehman has no need to raise capital and would do so only if the right market opportunity presented itself.
Tyson shares fell 7.2 percent to $17.12.
Toll Brothers (TOL.N), the largest U.S. luxury home builder, led the Dow Jones homebuilders index .DJUSHB higher after it posted a smaller-than-expected loss. Its shares rose 1.3 percent to $21.24. (Editing by Leslie Adler)
