Wall Street headed for another big drop on Monday, one that could hurl the Dow Jones industrials below 7 000, after American International Group posted a $61,7-billion quarterly loss.
The United States government said it would give AIG another $30-billion in loans, in addition to the $150-billion it has already given the ailing insurer.
Concerns about the struggling financial sector and the weakening economy have sent stocks to their lowest levels in 12 years. The Dow Jones industrial average has dropped for six consecutive months, and is worth less than half of its October 2007 record high of 14 164,53.
Billionaire Warren Buffett, in his highly anticipated annual letter to investors on Saturday, said his insurance and investment company, Berkshire Hathaway Inc, had its worst year ever in 2008.
The grim news came a day after the government said gross domestic product for the fourth quarter shrank at an annual rate of 6,2%.
Buffett said he is sure ”the economy will be in shambles throughout 2009 — and, for that matter, probably well beyond — but that conclusion does not tell us whether the stock market will rise or fall”.
Ahead of the market’s open, Dow futures tumbled 152, or 2,16%, to 6 900. Standard & Poor’s 500 index futures sank 14,60, or 1,99%, to 719,60, while Nasdaq 100 index futures lost 21,25, or 1,90%, to 1 095,75.
Bond prices rose early on Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2,96% from 3,02% late on Friday. The yield on the three-month T-bill, considered one of the safest investments, was little changed at 0,26%.
The dollar was mostly higher against other major currencies, while gold prices fell.
Light, sweet crude fell $4,18 to $42,58 in electronic pre-market trading on the New York Mercantile Exchange.
In Asian trading, Japan’s Nikkei stock average dropped 3,81% and Hong Kong’s Hang Seng index fell 3,81%. In late morning trading in Europe, Britain’s FTSE 100 fell 3,96%, Germany’s DAX index fell 2,74%, and France’s CAC-40 fell 3,31%. — Sapa-AP