The stock market suffered one of its worst days in years today as investors reacted to a stunning reshaping of the landscape of Wall Street...

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NEW YORK — The stock market suffered one of its worst days in years today as investors reacted to a stunning reshaping of the landscape of Wall Street that took out two storied names: Lehman Brothers and Merrill Lynch.

The Dow Jones industrial average plunged 504.48, or 4.4 percent, to close at 10,917.51, falling below the 11,000 mark for the first time since mid-July.

Broader stock indicators also fell. The Standard & Poor’s 500 index slid 59.00, or 4.7 percent, to 1,192.70, and the Nasdaq composite index sank 81.36, or 3.6 percent, to 2,179.91.

Stocks also posted big losses in markets across much of the globe as investors absorbed Lehman’s bankruptcy filing and what was essentially a forced sale of Merrill Lynch to Bank of America for $50 billion in stock.

While those companies’ situations had reached some resolution, the market remained anxious about American International Group (AIG), which is seeking emergency funding to shore up its balance sheet. A faltering of the world’s largest insurance company likely would have financial implications far beyond that of Lehman, the largest U.S. bankruptcy.

The swift developments are the biggest yet in the 14-month-old credit crises that stems from now toxic subprime mortgage debt.

Investors are worried that trouble at AIG and the bankruptcy filing by Lehman, felled by $60 billion in bad debt and a dearth of investor confidence, will touch off another series of troubles for banks and financial institutions that may be forced to further write down the value of their own debt assets. Wall Street had been hopeful six months ago that the collapse of Bear Stearns would mark the darkest day of the credit crisis.

AIG’s troubles a week after its stock dropped 45 percent are worrisome for some investors because of the company’s enormous balance sheet and the risks that troubles with that company’s finances could spill over to the companies with which it does business. AIG, one of the 30 stocks that make up the Dow industrials, fell $7.38, or nearly 61 percent, to close at $4.76.

While the market was down sharply for much of the session, the selling accelerated in the last hour.

“I think as we get closer to the close, people continue to get more nervous,” said Ryan Larson, senior equity trader at Voyageur Asset Management, a unit of RBC Dain Rauscher. “People sense that there is still a lot more pain to be felt.”

The S&P 500 broke through the 1,200.44 trading low seen in mid-July, a key level traders watch. Much of the trading day until about the last hour had been orderly, Larson said, because the market had tested another key level early in the session and managed to stay above it. But the eventual drift lower prompted some investors to hit the “sell” button, he said.

Declining issues overwhelmed advancers on the New York Stock Exchange, where 196 stocks rose compared to 3,027 that fell. Volume came to a moderate 1.4 billion shares.