Lehman, GM Drive Stocks Down

The markets enjoyed modest gains before dropping sharply this afternoon as rumors swirled that Lehman Brothers may face a liquidity problem and automakers reported weak May sales, MarketWatch reports. The Dow closed down 100.97 at 12,402.85, the Nasdaq down 11.05 at 2,480.48, and the S&P 500 down 8.02 at 1,377.65. 

GM’s share price illustrated the day's trends: Boosted by a morning report of the planned cost-cutting measures, it fell after a weak sales report. Lehman led financials down off speculation that the firm may have to raise $4 billion in fresh capital. “Right now people are selling first and asking questions later when it comes not only to Lehman, but to the financials in general,'' said one fund manager. (More Dow Jones stories.)