Dow ends week with big decline

By TIM PARADIS, Associated Press

Last update: May 9, 2008 - 8:30 PM

NEW YORK - Wall Street 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.

Insurer American International Group Inc. helped send the Dow Jones industrial average down about 120 points after posting a wider-than-expected first-quarter loss that rekindled anxiety about the strained state of the global financial system.

AIG reported it lost $7.81 billion -- its second consecutive quarterly loss -- and revealed plans to raise $12.5 billion. 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.

Phil Orlando, chief equity market strategist at Federated Investors said investors retreated primarily because of the AIG news. But he 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.

The Dow fell 120.90, or 0.94 percent, to 12,745.88.

Broader stock indicators were also lower. The Standard & Poor's 500 index fell 9.40, or 0.67 percent, to 1,388.28, and the Nasdaq composite index fell 5.72, or 0.23 percent, to 2,445.52.

Recent Business stories

Ohio agency director appears to back off Strickland's prevailing wage stance in taped comments - May 9, 2008

Ohio agency director appears to back off Strickland's prevailing wage stance in taped comments - In videotaped comments, a state agency director appears to back off new standards Ohio Gov. Ted Strickland's administration has been pushing that would require prevailing union wages to be paid on more state construction projects. More