I Guess it Will Get Worse Before it Gets Better

New York – The Dow Jones Industrial Average fell below 7,000 points for the first time since 1997 on Wall Street Monday, following stock sell-offs across the globe after American International Group Inc (AIG) reported a 62-billion-dollar quarterly loss. The United States’ deepening recession and financial crisis mean the blue-chip Dow has now lost more than half its value since reaching a record high of 14,000 points in October 2007. US stocks had already plunged last week to their lowest level since 1997.

The Dow index lost 4.2 per cent, or 299.64 points, to 6,763.29. The broader Standard & Poor’s 500 Index fell 4.7 per cent, or 34.27 points, to 700.82. The technology-heavy Nasdaq Composite Index shed 4 per cent, or 54.99 points, to 1,322.85. Stocks in Europe and Japan fell sharply earlier in the day. AIG reported a loss of 99.3 billion dollars for the whole of 2008, including 61.7 billion dollars in the fourth quarter alone, due to its exposure to the US housing market downturn.

The Treasury said the insurance giant would get another 30 billion dollars in government aid to help avoid bankruptcy, on top of 150 billion dollars already provided to the ailing insurer in the form of loans and guarantees. The US currency rose against the euro to 79.55 euro cents from 78.94 euro cents on Friday. The dollar fell against the Japanese currency to 97.30 yen from 97.57 yen.

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