Insurer's big loss, along with a rise in oil prices, lackluster retail sales and spike in unemployment claims, weigh on markets.
Stocks
fell Thursday morning as rising oil prices, lackluster retail sales and
AIG's big quarterly loss exacerbated worries about the slowing economy.
However, declines were tempered by a better-than-expected housing market report released in the mid-morning.
The
tech-heavy Nasdaq composite lost 0.2%, bucking bigger losses thanks to
strength in big tech stocks such as Microsoft and Intel .
Stocks
fell sharply in the first half hour of trading, but managed to recover
some losses after the release of the June pending home sales index.
Sales rose 5.3% in the month versus forecasts for a drop of 1%.
U.S. light crude oil for
September delivery rose $2.02 to $120.60 a barrel on the New York
Mercantile Exchange after ending the previous session at a three-month
low.
The world's largest retailer Wal-Mart
reported July sales at stores open a year or more rose 3%, within its
forecasted range of growth of 2% to 4%, but short of analysts'
expectation that sales would grow 3.4%. Wal-Mart shares fell nearly 4%.
Fellow discount retailer Costco reported sales rose 10%,
topping forecasts, while Target said sales fell 1.2% -- a
bigger-than-expected drop.
A variety of retailers
reported lackluster sales, reflecting the end of the impact from the
government stimulus checks mailed out earlier this summer.
Clothing retailers were hit particularly hard, with both Abercrombie & Fitch and Pacific Sunwear of America reporting steeper-than-expected declines. Abercrombie shares fell 9% and Pacific Sunwear fell 3%.
On
Thursday, the government reported that the number of Americans filing
new claims for unemployment last week rose by 7,000 to 455,000. That
figure represents a more than 6-year high.
Late Wednesday, the insurer AIG posted
a steeper-than-expected quarterly loss of $5.36 billion due to massive
writedowns related to the credit collapse. The Dow component reported a
profit a year earlier. On a per-share basis, the company lost 51 cents
excluding one-time items, versus forecasts for a 63-cent gain. Shares
of AIG fell nearly 18% Thursday.
In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.99% from 4.05% late Wednesday.
COMEX gold for October delivery rose $6.70 to $885.50 an ounce.