Stocks close out difficult week with big losses
NEW YORK -- Stocks ended the week with a big decline as investors grappled with two of the biggest threats to the economy: fallout from turmoil in the credit market and surging energy prices. All three major indexes suffered losses for the week.
For the week, the Dow fell 2.39%, the S&P 500 declined 1.81% and the Nasdaq lost 1.27%.
AIG reported it lost $7.81 billion — its second straight quarterly loss — and revealed plans to raise $12.5 billion in the coming months. The world's largest insurer, like many of its peers in the financial services sector, has seen its investments in the credit markets plunge in value.
Meanwhile, rising crude oil prices remained a source of worry for investors, as they had much of the week and in recent months. Oil futures rose above $126 a barrel for the first time, further stoking Wall Street's concerns about inflation that could curtail consumer spending. Light, sweet crude rose as high as $126.20 on the New York Mercantile Exchange before settling at a record $125.96. For the week, oil jumped nearly $10.
"I think what we're seeing so far is a reaction principally to the AIG news," said Phil Orlando, chief equity market strategist at Federated Investors. "That news came as something of a surprise to some and a wake-up call to most that the financial-service companies are not yet out of the woods."
But Orlando noted that the market has pulled back this week after a sizable rebound in the last two months and that some investors might be eager to lock in profits while Wall Street irons out some concerns about the financial sector.
"Our view has been that the market, generally speaking, is in pretty good shape with the exception of the financial service companies and the consumer dictionary companies," he said, noting that the news from AIG is an important reminder of the troubles remaining among financials.
Related Stories
ABC News Live