Stocks End Week to the Downside

The major averages were sluggish all day, with AIG one of the primary reasons.

By TSC Staff May 09, 2008

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Updated from 3:46 p.m. EDT

Stocks in the U.S. were weak for the entire session and closed lower Friday as traders dealt with another sizable loss at AIG (AIG) and a continuing advance in crude oil prices.

The Dow Jones Industrial Average was down 120.90 points, or 0.9%, to 12,745.88, and the S&P 500 lost 9.40 points, or 0.7%, at 1388.28. The Nasdaq gave back 5.72 points, or 0.2%, at 2445.52.

One of the drags on the Dow was AIG, which fell 8.8% to $40.28. 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. Crude was up $2.27 to $125.96 a barrel in New York, its best-ever finish. Earlier, it was as high as $126.25.

AIG wasn't the only key financial company making headlines as the week came to a close. Citigroup (C), also part of the Dow, was down 2.8% to $23.63 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 5.9% to $5.07 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) gained 2.6% a day after its quarterly report, which was followed by a Stifel Nicolaus upgrade. Priceline.com (PCLN) was even more impressive, adding 12% to $138.63 in the wake of its strong numbers.

Activision (ATVI) gained 14.2% after sales of Guitar Hero 3 and Call of Duty IV led to robust fourth-quarter earnings.

Treasury prices were higher. The 10-year note was up 3/32 in price, yielding 3.77%, and the 30-year bond gained 10/32, yielding 4.52%.

The dollar was weak against most of its competitors, including a drop of more than half a percent against the euro to $1.548.

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 tumbled. 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 lost 1.1%, and the Paris Cac retreated by 1.9%. Frankfurt's Dax was lower by 1%.