AIG's loss pulls stocks down, oil over $126 hurts
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Fri, 09 May 2008 16:52:05 GMT |
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Reuters |
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US (Business) |
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By Cal MankowskiNEW 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)
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