U.S. Stocks Cut Losses In The Wake Of AIG Disclosure
NEW YORK (MarketWatch) -- U.S. stocks mostly fell Monday after insurer American International Group Inc. pointed to potential trouble with the valuation of its credit-default swap portfolio, fueling new worries about the financial sector.
The Dow Jones Industrial Average fell 36.8 points to 12,145.3., with AIG leading the declines, its stock off 11.3%.
AIG disclosed the potential trouble with the valuation of its derivatives in an SEC filing earlier Monday.
Other blue-chip financials fell as well, with Citigroup Inc. off 0.2%; American Express Co. down 0.3% and J.P. Morgan Chase off 6.6%.
Of the Dow's 30 components, 16 were trading in positive turf, with General Motors Corp. gaining the most, up 4.2%.
Broader indexes were mixed.
The S&P 500 fell 0.48 points to 1,330.81 and the Nasdaq Composite climbed 6.9 points to 2,311.75.
Tech stocks were buoyed in part by Yahoo Inc.'s formal rejection of Microsoft Corp.'s $44.6 billion takeout offer, fueling thoughts of a higher bid for the Internet giant. .
Volume on the New York Stock Exchange topped 410 million shares, and 670 million shares were traded on the Nasdaq, with decliners leading advancers about 4 to 3 on both exchanges.
On the New York Mercantile Exchange, crude oil futures gained 33 cents to stand at $92.10 a barrel. .
Elsewhere on the NYMEX, gold climbed $2.40 to $924.70.
The dollar came off earlier lows against most major counterparts, but remained mostly off. .
Yahoo rejected Microsoft's takeover bid as inadequate, while Microsoft is expected to take its offer directly to shareholders as its next move.
Motorola and Nortel Networks are in talks to merge their wireless-infrastructure businesses in a deal that could lead to the creation of a firm with $10 billion in annual sales, according to a Wall Street Journal report.
Motorola shares advanced 2%, while Nortel gained 0.5%.
Ahead of the opening bell, Dow Jones & Co. disclosed plans to replace Dow industrials components Altria Group Inc. and Honeywell International Inc. with Bank of America Corp. and Chevron Corp. , effective Feb. 19.
A restructuring that will trim the size of Altria sparked the first changes in the 111-year-old stock index since April 8, 2004, with Bank of America and Chevron chosen because the financial sector and oil industries are currently under-represented on the index, the company said.
Shares of Altria fell 0.6%, and those of Honeywell were down 1.2%.
Bank of America's shares slipped 0.2%, while Chevron gained 0.6%.
U.S. stocks closed with losses last week, hurt in particular by data showing a steep drop in services-sector output.
While there a number of economic reports out this week, there aren't any economic releases of significance to start the week.
By Kate Gibson