Stocks Headed for Lower Close

The major averages have been weak all day, with AIG one of the primary reasons.

By TSC Staff May 09, 2008

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Updated from 1:53 p.m. EDT

Stocks in the U.S. remained in the red Friday as another sizable loss at AIG (AIG) and oil's continuing advance gave sellers the advantage.

The Dow Jones Industrial Average was down 98 points to 12,769, and the S&P 500 was losing 7 points at 1391. The Nasdaq was down 3 points at 2448.

One of the drags on the Dow was AIG, which was falling 8.5% to $40.38. The selloff came a day after the insurer said it lost $7.81 billion in its first quarter because of big writedowns on credit-default swaps and mortgage-related investments.

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Also depressing sentiment was oil's extended climb into uncharted territory. In recent New York trading, crude was up $1.69 to $125.38 a barrel. Earlier, it was as high as $126.20 in the premarket.

Elsewhere in the commodities complex, gold reversed course and went down $8.30 to $886.60 an ounce. Silver was losing 30 cents to $16.57.

AIG wasn't the only key financial company making headlines as the week wound down. Citigroup (C), also part of the Dow, edged down 1% to $24.04 as investors mulled word that CEO Vikram Pandit is looking at ways to shed as much as $400 billion in noncore assets.

One of the big winners was Circuit City (CC), whose shares jumped 8.8% to $5.21 after the consumer-electronics seller said it would open its books to potential buyer Blockbuster (BBI) and the video rental chain's largest shareholder, billionaire investor Carl Icahn.

On the technology side, Nvidia (NVDA) was gaining 4.8% a day after its quarterly report, which was followed by a Stifel Nicolaus upgrade. Priceline.com (PCLN) was even more impressive, jumping 14.6% to $141.86 in the wake of its strong numbers.

Activision (ATVI) was gaining 11% after sales of Guitar Hero 3 and Call of Duty IV led to robust fourth-quarter earnings.

Treasury prices were surrendering their early gains. The 10-year note was unchanged in price, yielding 3.78%, and the 30-year bond was gaining just 5/32, yielding 4.53%.

The dollar was weak against most of its competitors, including declines of 0.8% against both the yen and the Swiss franc. The euro rose 0.2% to $1.5437.

On the data side, the March U.S. trade deficit shrank to $58.2 billion from $61.7 billion in February, in part because the stumbling greenback made domestic goods cheaper overseas. Analysts expected the deficit to be $61 billion.

Meanwhile, markets overseas were sinking. Tokyo's Nikkei fell 2.1% overnight, and Hong Kong's Hang Seng shed 1.5%. Europe's major indices weren't much better. London's FTSE was losing 1.2%, and the Paris Cac was retreating 2.5%. Frankfurt's Dax was lower by 1.3%.