Wall Street drops on AIG fallout, economy fears

NEW YORK // Stocks slid on Monday as news of a record $61.7 billion (Dh224bn) quarterly loss at embattled insurer American International Group fuelled worries the already deep financial crisis is worsening. The Dow Jones industrial average fell to its lowest level since May 1997 on an intraday basis, hit by a sell-off in financial and energy stocks. Wall Street extended a global stock market rout that slammed stock markets around the world, with European benchmark indexes down 3 per cent or more.

Adding to the gloom were comments by billionaire investor Warren Buffett who said "the economy will be in shambles throughout 2009. "The problem is that no-one yet has a feel that the recession will end this year," said John Wilson, chief technical strategist at Morgan Keegan in Memphis, Tennessee. "The depth and duration of the recession is up for question and until people determine that, I think the market will have a tough time making a lot of progress."

The Dow Jones industrial average fell 108.08 points, or 1.53 per cent, to 6,954.85. The Standard & Poor's 500 Index slid 12.25 points, or 1.67 per cent, to 722.84. The Nasdaq Composite Index dipped 16.17 points, or 1.17 per cent, to 1,361.67. *Reuters