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AIG's loss pulls stocks down, oil over $126 hurts

Posted : Fri, 09 May 2008 16:52:05 GMT
Author : Reuters
Category : US (Business)
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By Cal Mankowski

NEW YORK (Reuters) - Stocks fell on Friday after American International Group , the world's largest insurer, reported a record $7.8 billion quarterly loss, reviving concerns about the financial services sector.

Oil continued on a record-breaking streak, rising above $126 a barrel before slipping below $125. Investors have been concerned that the oil price will cause inflation to spread throughout the economy.

Pharmaceutical companies' shares were a major drag after Mylan Inc reported a wider loss and revenue below analysts' forecasts, and Bristol Myers Squibb Co fell on news that a generic version of blood thinner Plavix may soon be approved in Europe.

AIG had to write down assets linked to subprime mortgages and said it would raise $12.5 billion in new capital to strengthen its balance sheet.

Another big financial company, Citigroup Inc , said it intends to shed roughly $400 billion of non-core assets in a bid to become more competitive.

"The news background is not good, but since we made lows around the end of January, I think the market is transitioning from a bear market to a bull market," said Al Goldman, chief market strategist at Wachovia Securities in St. Louis. "It takes time. We did a lot of damage."

The Dow Jones industrial average <.DJI> fell 112.11 points, or 0.87 percent, to 12,754.67. The Standard & Poor's 500 Index <.SPX> declined 11.53 points, or 0.82 percent, to 1,386.15. The Nasdaq Composite Index <.IXIC> lost 12.24 points, or 0.50 percent, to 2,439.00.

AIG shares slid 8.5 percent at $40.39, ranking as the heaviest weight on both the Dow and the S&P 500. The drop in AIG accounted for about 32 points of the Dow's loss.

Mylan stock sank nearly 12 percent to $10.98, while Bristol Myers stock declined 4.6 percent to $21.75.

Energy stocks fell even though U.S. crude oil futures hit a record $126.20 a barrel.

Shares of Exxon Mobil fell 1.3 percent to $88.38, while Chevron shares lost 0.7 percent to $96.78, both on the NYSE.

(Reporting by Cal Mankowski; Additional reporting by Jennifer Coogan; Editing by Jan Paschal)


(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.



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