Sponsored by Digital Look Events

US close: AIG sours mood again

News for Spread Betters

PreviousPrevious
NextNext

There's a new Investor Edition of CMC Markets' spread betting platform... and it's exclusive to DigitalLook.com users...

Get full details about Marketmaker:Investor Edition here. Advertisement

Date: Sunday 11 May 2008

LONDON (ShareCast) - US stocks ended the day showing a triple digit fall as investors fretted after insurance giant AIG's grim statement the previous evening.

AIG plans to raise $12.5bn to repair its balance sheet after taking substantial write-downs in the first quarter. Those write-downs led to losses of $7.81bn. AIG added it could offer “no assurance” that further write-offs are not around the corner. The stock was one of the day’s biggest fallers.

On the upside, the US trade deficit contracted more than expected, as US consumers tightened their belts and spurned imported goods. The deficit narrowed to $58.2bn in March from $61.7bn, although it was not all good news, as exports showed a monthly decline for the first time in a year.

The Dow Jones fell 120 at 12,745. The S&P 500 shed 9 points at 1,388. The tech-heavy NASDAQ Composite lost 5 at 2,445.

Soaring oil prices, which are currently well past $125 a barrel as the weaker dollar pushes investors to buy commodities, did no favours to big fuel users such as Delta Air Lines and cruise company Carnival.

Oil refiners were also on the skids, with Tesoro and Valero Energy leading the way down, after Goldman Sachs said refiners are facing liquidity issues.

Generic drug company Mylan was friendless after it reported increased first quarter losses of $443.9m, compared with losses of $71.3m in the first quarter of the previous year.

Citigroup eased after announcing plans to run down about $400bn of assets as it seeks to claw its way back to profitability.

Circuit City Stores has agreed to open its books to DVD-rental company Blockbuster and billionaire financier Carl Icahn, effectively putting itself up for sale. Fellow consumer electronics retailer Radio Shack moved higher in sympathy.

In other company news, General Motors said in a regulatory filing that it would give financial support to end the strike at auto parts supplier American Axle and Manufacturing Holdings.