Stocks fell Monday as a British bank run kept tensions high on Wall Street ahead of the Federal Reserve’s Tuesday decision on interest rates.

The market is betting on a rate cut from the Fed, but investors are not completely sure what the central bank will do and what it will say in its accompanying economic statement. Furthermore, with the major brokerages’ third-quarter results yet to be released, investors are uncertain about how badly the summer’s stock downturn, souring home loans, and credit squeeze hit the banking industry.

So as Northern Rock PLC, Britain’s fifth-largest mortgage lender, saw its stock plunge and customers withdraw billions of dollars after it issued a profit warning Friday and drew on emergency funds from the Bank of England, U.S. investors took no chances and pared back their stock holdings, particularly in the financial sector. Talk from former Fed Chairman Alan Greenspan of the possibility of a recession amid high inflationary pressures also elevated Wall Street’s jitters, as did job cuts at Merrill Lynch & Co.’s First Franklin Financial Corp. [MORE]