Stocks Reverse; Dow Down 280

After a strong rally yesterday following news of the Fannie/Freddie bailout, stocks gave most of the gain back today as the failure of talks between Lehman Brothers and Korea’s state bank sent shares in the investment giant down 44.1%, MarketWatch reports. The Dow fell 280.01 to close at 11,230.73. The Nasdaq lost 59.95 to 2,209.81, while the S&P 500 closed down 43.28 at 1,224.51.

Even the threat of Hurricane Ike couldn’t stop oil futures from plummeting $3.08, as traders remained certain that flagging global demand will keep prices low. Financials also charted lower, as AIG and American Express fell 19.5% and 5.6%, respectively. Housing continues to look weak, as the National Association of Realtors reported that pending home sales fell 3.2% in July. (More Dow Jones stories.)