New York - Major US stock indices tumbled Friday as an
unexpected loss from American International Group and a Citigroup Inc
legal settlement drove down financial shares, while bargain retailer
Wal-Mart Stores Inc forecast slower sales growth.
AIG late Wednesday reported 5.36 billion dollars in second-quarter
losses related to the subprime mortgage crisis, sending shares 18 per
cent lower in trading on Thursday. Investors speculated that the
insurer would have to raise extra capital to overcome the heavy
losses.
Citigroup reached a multibillion-dollar settlement with regulators
and governments on claims it improperly urged customers to buy
auction-rate securities - a type of bond that fell apart in
conjunction with the subprime mortgage crisis.
Citigroup agreed to buy back 7.5 billion dollars worth of the
auction-rate securities from customers and help institutional
investors unload a further 12 billion dollars of the same securities.
Wal-Mart sent retail shares lower after forecasting a decline in
August sales, saying that most tax rebates sent out by the US
government had already been spent by consumers.
The blue-chip Dow Jones Industrial Average dropped 224.64 points,
or 1.93 per cent, to 11,431.43. The broader Standard & Poor's 500
Index tumbled 23.12 points, or 1.79 per cent, to 1,266.07. The
technology-heavy Nasdaq Composite Index was down 22.64 points, or
0.95 per cent, to 2,355.73.
The dollar rose to 65.24 euro cents from 64.87 euro cents on
Wednesday but fell slightly to 109.35 Japanese yen from 109.65 yen.
Gold futures fell 5.10 dollars to 877.90 dollars per fine ounce.
USA
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