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US markets slump despite AIG bailout
Published on Thu, Sep 18, 2008 at 12:33 in Markets section
Tags: Wall Street, AIG , New York
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New York: The US markets did not react positively to the $85 billion bailout package for insurance giant AIG by the Federal Reserve. Wall Street saw a three-year low on Wednesday and the Dow Jones industrial average fell by over 4.06 per cent and closed at 10,609.
The Nasdaq was down at 4.94 per cent and closed at just over 2,098.
Standard & Poor's 500 Index dipped low at 4.71 per cent and closed at just over 1,156.
Analysts say the bailout was the only way to avert a bigger financial crisis.
"A lot of people talk about being too big to fail and it's a phrase that's been used all year and applied to nearly every financial institution. AIG really deserves the label. Their balance sheet, which means their assets, are about $1.04 trillion. They do business with almost every other financial institution in the United States and they help insure the debt on those financial institutions. If AIG went down, it would just create repercussions through every other bank," Heidi Moore, business writer for the Wall Street Journal, said about the bailout.
"It's just such a mess, what's going on, that it's like picking up the pieces wherever you can, trying to minimise the damage throughout the whole economy," Ian Atkins said.
Chief Investment Strategist at Standard & Poor's Sam Stovall said, "I thought that with the Fed coming in and bailing out AIG, in a sense blinking, that I thought that the most recent calamity had been averted and as a result we would probably see a knee-jerk reaction to the upside. But possibly we ended up getting that upside yesterday afternoon as whispers had possibly circulated that some sort of a deal was near, and that today people are just right back to where we were the day before, feeling very uncertain about the second half of the alphabet ."
"I think it's very overwhelming. I think that the climate is just .... it's scary, people are nervous about their finances. At the end of the day, it's very nerve wracking," Brooke Thorpe said.
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