Stocks closed sharply lower yesterday as Wall Street braced for the Tokyo market's reaction to the collapse of Japan's Yamaichi Securities. Tokyo was closed yesterday for a public holiday.
The Dow Jones industrial average lost 113.15 points, or 1.4 percent, at 7,767.92.
In the broader market, declining issues swamped advances by a three-to-one margin on active volume of 518 million shares on the New York Stock Exchange.
The Nasdaq composite index sank 33.75 points, or 2 per cent, to 1,588.00.
Japan was worried about how its financial markets react when business resumed after a public holiday to the collapse of Yamaichi Securities, its fourth largest brokerage house, leaving a trail of debt worth $23.6 billion (£15.7 billion).
The Kyodo News Service reported yesterday that the Bank of Japan (BOJ) has asked the Federal Reserve Bank of New York to help Japanese banks in raising dollar funds following a series of financial failures in Japan.
A BOJ spokesman declined to comment on the report.
The request was based on a pact the Bank of Japan has made with the New York fed, under which the latter will provide dollars to cash-strapped Japanese commercial banks in the event of a financial crisis in Japan.
