AIG, the world's biggest insurer, dropped to its 13-year low, after Fitch Ratings warned Friday that it might cut its ratings on the insurer and Credit Suisse Group said the company may lose 2.41billion U.S. dollars this quarter.

Lehman Brothers slumped more than 5 percent, as a Korean bank will reconsider a potential investment in the fourth-largest U.S. securities firm. Moreover, Columbian Bank and Trust Co. collapsed amid bad real-estate loans Friday, becoming the ninth U.S. bank bankrupted this year and dragged banks down.

Investors seemed unfazed, as the market suffered a broad sell-off Monday, even after the U.S. National Association of Realtors posted that sales of existing homes increased 3.1 percent in July, much stronger than Wall Street had expected.

The Dow Jones fell 241.81, or 2.08 percent, to 11,386.25. Broader indexes also traded lower. The Standard & Poor's 500 index declined 25.36, or 1.96 percent, to 1,266.84; and the Nasdaq fell 49.12, or 2.03 percent, to 2,365.59.