Financials drag on market; Dow falls more than 240
By TIM PARADIS
The Associated Press
Monday, August 25, 2008; 6:59 PM

Stocks sank in light trading Monday as worries about American International Group Inc. touched off broader concerns that the deterioration of the credit markets will bring more big losses for financial companies.

The major indexes lost about 2 percent. The Dow Jones industrial average fell by nearly 250 points, erasing a gain of about 200 points seen Friday. Bond prices also jumped as investors fled to the safety of government debt.

New York-based AIG was the steepest decliner among the 30 stocks that make up the Dow industrials after a Credit Suisse analyst cut his price target on the world's largest insurer and forecast steep losses for the third quarter. Adding to investors concerns, Fitch Ratings warned late Friday that it might cut its ratings on the company, which has been buffeted by investors' distaste for some of the types of complex debt instruments on AIG's books.

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