Midday Market Update: U.S. Losses Pave the Way for Global Declines

By , Money Morning •

By Jennifer Yousfi
Managing Editor

Reports that American International Group Inc. (AIG) may have overestimated the value of book assets caused shares to plunge over 10% and led U.S. stocks lower at midday, as nine stocks fell for every seven that gained on the New York Stock Exchange.

At noon ET, the three major U.S. stock indices were down less than 1%. The blue-chip Dow Jones Industrial Average Index slipped 56.98 points (-0.47%), to trade at 12,125.15. The tech-laden Nasdaq Composite Index was down, losing 2.31 points (-0.10%), to reach 2,302.54. The broader Standard & Poor's 500 Index slumped 3.52 points (-0.26%), to settle at 1,327.77.

Basic materials, consumer goods [both cyclical and non-cyclical], energy and technology each posted sector gains of less than 1%. The financial and healthcare sectors posted the biggest losses among the market sectors, down 1.28% and 0.45%, respectively.

Yahoo! Inc's (YHOO) formal rejection of Microsoft Corp.'s (MSFT) hostile takeover pushed its own shares higher, while causing its unwelcome suitors shares to drop.

In overseas markets, China's markets were open after being closed two and a half days in honor of the Chinese New Year holiday at the end of last week. The markets were closed early on Wednesday and remained closed Thursday and Friday.

In Hong Kong, the blue-chip Hang Seng index shed 853.35 points to close at 22,616.11 in the first trading day of the Year of the Rat. [For a story on Feng Shui trading tips for the Chinese New Year, please click here.]

Japan's Nikkei Index lost 189.91 points to end at 13,017.20 on Friday, a 1.44% decline. Japan's markets are closed today (Monday) for a public holiday, and some analysts said that traders were probably wary of holding their positions over the course of a three-day holiday weekend.

European and U.K. stocks were mostly flat, as banking shares continue to drag down indices on continued credit concerns. Some sectors did show gains, notably the shares of oil and gas and pharmaceutical firms.

The U.S. greenback was down 0.048% versus the euro at noon.

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