The day started with an orderly sell-off that picked up steam in the second half of the session. No sector escaped the carnage.

The Dow lost 504 points, or 4.42%, to 10917. The Nasdaq Composite Index fared slightly better, giving up 81.36 points, or 3.60%, to 2179. The S&P 500 Index now finds itself below its July lows, shedding 59 points, or 4.71%, to 1192.

There were historic deals, and non-deals, all weekend long, as two of Wall Street's most revered investment banks threw in the towel. Lehman Brothers (LEH) declared bankruptcy after it couldn't find a partner who would take on its problems. Merrill Lynch (MER) fared better as Bank of America (BAC) came to its rescue.

All eyes now turn to American International Group (AIG), the world's largest insurance company, which is desperately trying to raise capital. The State of New York, which regulates insurance companies, announced that it was giving AIG permission to tap $20 billion from subsidiaries in order to give it breathing room while it continued to look for its own White Knight. AIG has far broader financial implications, worldwide, if it were to fail, than Lehman Brothers' bankruptcy, due to its size and global reach.

Also on Wall Street's watch list are Wachovia (WB), whose stock was pummeled nearly 25% today, and Washington Mutual (WM). Both companies have large mortgage exposure. Citigroup (C) released a memo to employees saying it had adequate capital which was not affected by the Lehman bankruptcy to try and quell jitters. The stock closed down 15% anyway.

If it wasn't for the financial crisis, the big news would have been Hurricane Ike, which struck the Texas coast over the weekend. Several million people in the Houston area are still without power. The energy complex fared pretty well considering the winds and storm surge. Fourteen Texas and Louisiana refineries, which refine 3.57 million barrels a day, remain closed.