Stocks took a nosedive at the opening bell, with the Dow falling 190.28 points within minutes, as the market absorbs an AIG bailout that prevented a body blow to the economy but was none too friendly to shareholders, the Wall Street Journal reports. The insurer fell 21% at the opening bell, leading a wide decline in financials. Housing starts also came in below analyst estimates for August, falling 6.2% to a 26-year low.
The Nasdaq was down 2%, and the S&P fell a similar 2.1%. “There was obviously good news on AIG,” said one trader, “but the backdrop is still quite risky, highlighted by the fact that the Fed has had to step in.” Others wonder if the Fed’s move will do enough to stem the tide. Morgan Stanley fell 17%, despite better-than-expected quarterly results, while Goldman Sachs fell 11%.