Credit, energy woes fuel market decline

NEW YORK - Wall Street ended the week with a big decline as investors grappled with two of the biggest threats to the economy: fallout from turmoil in the credit market and surging energy prices. All three major indexes sustained losses for the week.

Insurer American International Group Inc. helped send the Dow Jones industrial average down about 120 points after posting a wider-than-expected first-quarter loss that rekindled anxiety about the global financial system.

AIG reported it lost $7.81 billion - its second straight quarterly loss - and revealed plans to raise $12.5 billion in the coming months. The world's largest insurer, like many of its peers in the financial-services sector, has seen its investments in the credit markets plunge in value.

Meanwhile, rising crude-oil prices remained a source of worry for investors. Oil futures rose above $126 a barrel for the first time, further stoking Wall Street's concerns about inflation that could curtail consumer spending. Light, sweet crude rose as high as $126.20 on the New York Mercantile Exchange before settling at a record $125.96. For the week, oil jumped nearly $10.

The Dow fell 120.90, or 0.94 percent, to 12,745.88. The Standard & Poor's 500 index fell 9.40, or 0.67 percent, to 1,388.28, and the Nasdaq composite index fell 5.72, or 0.23 percent, to 2,445.52.

For the week, the Dow fell 2.39 percent, the S&P 500 declined 1.81 percent and the Nasdaq lost 1.27 percent.

The economic figures arriving yesterday underscored the slowdown in the U.S. economy. The Commerce Department said the U.S. trade deficit narrowed in March as demand for imports registered the biggest decline since the last recession was ending.

In corporate news, AIG fell $3.87, or 8.8 percent, to $40.28 after reporting its loss. The stock was by far the steepest decliner among the 30 stocks that make up the Dow industrials.

Citigroup Inc. said it hopes to shed $400 billion to $500 billion in assets and increase revenue by 9 percent over the next few years as it tries to recover from big losses tied to deterioration in the mortgage and credit markets. Citi, one of the Dow 30 stocks, fell 67 cents, or 2.8 percent, to $23.63.

General Motors Corp., also a Dow component, fell 86 cents, or 4.1 percent, to $20.29 after reporting in a regulatory filing it would provide financial support to help settle the 10-week strike at auto parts supplier American Axle & Manufacturing Holdings Inc.

Consumer electronics chain Circuit City Stores Inc. said it received a letter from suitor Blockbuster Inc. that the company's largest shareholder, financier Carl Icahn, is prepared to buy Circuit City even if the video-rental chain can't win the necessary financing or shareholder approval.

Circuit City jumped 28 cents, or 5.9 percent, to $5.07, while Blockbuster slipped 2 cents to $2.66.

Investors' caution yesterday preceded what will likely be a busy week of economic news now that the flow of quarterly earnings reports is beginning to ebb.

The Russell 2000 index of smaller companies rose 0.50, or 0.07 percent, to 720.05.

Japan's stock market fell 2.06 percent. Britain's FTSE index fell 1.05 percent, and France's CAC-40 fell 1.88 percent.