AIG bailout fail to stabilise US markets | india | Hindustan Times
Today in New Delhi, India
May 28, 2017-Sunday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

AIG bailout fail to stabilise US markets

The hope that the USD 85 billion bailout of American Insurance Group (AIG) would help stabilise the US markets were belied as the investors continued to flee the Wall Street.

india Updated: Sep 18, 2008 10:41 IST

The hope that the USD 85 billion bailout of American Insurance Group (AIG) would help stabilise the US markets were belied as the investors continued to flee the Wall Street, sending the blue chip Dow Jones Industrial average to its lowest level in almost three years.

The Dow yesterday fell by 449.36 points to 10,609.66 after a 500-point decline on Monday. It has lost 800 points or 7.1 per cent of the value this week alone and even after the markets closed, fears of other major financial institutions failing continued to dog the investors.

The Standard and Poor's 500 stock index was down by 4.7 per cent to 1156.39 and technology stock heavy Nasdaq fell 4.9 per cent to 2098.85. For Standard and Poor's, it was lowest level since May 2005 and for Nasdaq since August 2006.

Among other factors, the fears were fed by media reports late in the evening that Morgan Stanley had entered into merger talks with Wachovia and other banks as its share declined for seventh straight day, losing 24 per cent at USD 21.75 yesterday, the lowest level since 1998.

Goldman Sachs, the largest investment bank by market value, also saw its share decline sharply by 14 per cent to USD 114.50 and analysts said the question being asked is which institution would go down next.

As turmoil in financial markets continued, investors sought safe haven in gold, a traditional refuge during troubled time, sending its price up by USD 70 an ounce and government notes even though the yield was almost negligible.

The crisis, which began 13 months ago, is now taking increasing toll and the last two weeks have seen government taking over quasi-public mortgage firms Fannie Mae and Freddie Mae, bankruptcy of Lehman Brothers, sale of Merrill Lynch and costly rescue of AIG.