Blue chips slip on AIG disclosureFinancial giant's potential credit woes drag on Dow industrials. Techs in focus after Yahoo rejects Microsoft's offer.Video
NEW YORK (CNNMoney.com) -- Blue-chip stocks slipped Monday morning after American International Group signaled it may have to writedown more subprime-related debt. The Dow Jones industrial average (INDU) lost 0.5% and the broader Standard & Poor's 500 (SPX) index fell 0.3% nearly two hours into the session. The Nasdaq composite (COMP) held close to breakeven. Credit concerns took a toll on sentiment after AIG disclosed in a regulatory filing that it needs to clarify the way it values collateralized debt obligations (CDO), which may contain bonds backed by subprime mortgages. Shares of Dow component AIG (AIG, Fortune 500) sank more than 11% in early trading, weighing on the blue-chip index. Tech shares were little changed as investors digested Yahoo's rejection of Microsoft's unsolicited bid. Microsoft made a move for Yahoo on Feb. 1, making a cash-and-stock bid that was valued around $45 billion at the time. Yahoo said Monday the offer undervalued the company. Microsoft (MSFT, Fortune 500) shares fell roughly 2% in midday trading while Yahoo (YHOO, Fortune 500) shares edged higher. Also on the tech front, The Wall Street Journal reported that embattled cell phone maker Motorola (MOT, Fortune 500) is in talks with telecom equipment maker Nortel Networks (NT) about a deal to combine their wireless-infrastructure units in a joint venture. Elsewhere, shares of automaker General Motors (GM, Fortune 500), another Dow component, edged higher ahead of the company's earnings report Tuesday. The Dow Jones industrial average announced that it's adding Bank of America (BAC, Fortune 500) and Chevron (CVX, Fortune 500) to its 30-stock index. The bank and oil firm will replace Honeywell (HON, Fortune 500) and Altria (MO, Fortune 500) starting next week. Treasurys edged rose in early trading, with the yield on the benchmark 10-year note falling to 3.59% from 3.65% on Friday. Bond prices and yields move in opposite directions. Oil prices slipped 47 cents to $91.30 on the New York Mercantile Exchange. The dollar fell against the euro and the yen. |
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