Stocks fell on Friday after data pointed to more deterioration in the economy and the largest loss in insurer American International Group Inc’s history signaled the worst was far from over for the beleaguered financial sector.
Benchmark indexes sank to session lows after two widely watched surveys indicated U.S. consumer sentiment was at its lowest in 16 years and Midwestern business conditions were the weakest in more than six years reports Reuters.
Shares of financial companies led the decline, dragged by AIG, whose stock tumbled more than 5 percent, making the insurer the top drag on both the Dow and the S&P 500. Shares of Bank of America Corp (BAC.N), the No. 1 U.S. bank by market value, lost 2.1 percent.
A report by CNBC television saying that an effort to rescue troubled bond insurer Ambac Financial Group Inc (ABK.N) has hit a snag over the amount of capital banks would inject into the company added to the negative tone. Ambac shares slid 8.2 percent.
“People are positioned poorly. They got long thinking the bottom was in and went long. Now they’re paying the price. The flight to quality is in,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “The hope earlier in the week was that the insurer bailout was coming … but we are stuck in a quagmire.”
Read it here: Wall St. slides as Economic gloom builds