U.S. stocks fell today amid concern that American International Group Inc. could report a third-quarter loss because of debt exposure, while mortgage woes continued to weigh on financial issues.
The Dow Jones industrial average closed down 241.81, or 2.08%, at 11,386.25; the S&P 500 fell 25.36, or 1.96%, ending at 1,266.84; and the Nasdaq composite closed down 49.12, or 2.03%, at 2,365.59. All numbers are preliminary.
Credit Suisse analyst Thomas Gallagher slashed his third-quarter earnings estimates for AIG to a loss of 86 cents vs. a prior forecast of a 13-cent profit, anticipating that the worlds largest insurer would incur losses related to credit default swaps. AIG is expected to report its earnings in early November.
The housing crisis continued to take its toll, as regulators over the weekend closed Columbian Bank & Trust Co., Topeka, Kan., the ninth U.S. bank to fall this year due to mortgage exposure.
Housing is not out of the woods, and that means banks arent either, said Robert Brusca, chief economist at New York consultancy FAO Economics.
Lehman Brothers Holdings Inc. remained under pressure amid doubt that the firm could find an investor or acquirer.