U.S. stocks tumble on news of AIG's losses
A report from Swiss Bank UBS predicting more severe subprime mortgage losses also sends shivers across Wall Street.
Another batch of distressing news from the beleaguered financial sector sent the stock market reeling this morning.
A brutal loss at insurance giant American International Group Inc. and a prediction that subprime mortgage losses will hit $600 billion renewed fears that the subprime collapse and credit crisis are continuing to deepen despite Wall Street's $150 billion in writedowns so far.
As of 8:30 PST, the Dow Jones industrial average was down 210.12 points, or 1.7%, to 12,372.06. It was off almost 245 points at its low. It has fallen 6.7% this year.
The Standard & Poor's 500 fell 24.12 points, or 1.8%, to 1,343.56. It's down 8.5% this year.
Shares of AIG fell $3.69, or 7.4%, to $46.46 the morning after the world's biggest insurer disclosed a $5.3-billion fourth-quarter loss caused by a steep subprime writedown.
A report from Swiss bank UBS also sent shivers across Wall Street with its prediction that the total subprime hit at financial firms will quadruple to $600 billion, according to Bloomberg News.
Investors also were troubled by an economic report showing that consumer spending rose a better-than-expected 0.4% last month. The rise appeared to be due to higher prices for consumer goods rather than to a genuine increase in consumer purchases.
Inflation fears remained persistent as the Federal Reserve's preferred inflation measurement remained above the desired level.
Treasury bonds rallied again as the yield on the two-year note fell to 1.72% from 1.82% on Thursday and 2.00% on Wednesday.
walter.hamilton@latimes.com
