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Oil futures rose above $126 a barrel for the first time.
NEW YORK — Wall Street ended the week with a big decline as investors grappled with two of the biggest threats to the economy: fallout from turmoil in the credit market and surging energy prices. All three major indexes suffered losses for the week.
Insurer American International Group Inc. helped send the Dow Jones industrial average down after posting a wider-than-expected first-quarter loss that rekindled anxiety about the strained state of the global financial system.
AIG reported it lost $7.81 billion – its second straight quarterly loss – and revealed plans to raise $12.5 billion in the coming months. The world’s largest insurer, like many of its peers in the financial services sector, has seen its investments in the credit markets plunge in value.
Meanwhile, oil futures rose above $126 a barrel for the first time, further stoking Wall Street’s concerns about inflation that could curtail consumer spending. For the week, oil jumped nearly $10.
“I think what we’re seeing so far is a reaction principally to the AIG news,” said Phil Orlando, chief equity market strategist at Federated Investors. “That news came as something of a surprise to some and a wake-up call to most that the financial-service companies are not yet out of the woods.”
But Orlando noted that the market has pulled back this week after a sizable rebound in the last two months and that some investors might be eager to lock in profits while Wall Street irons out some concerns about the financial sector.
Economic figures arriving Friday underscored the slowdown in the U.S. economy. The Commerce Department said the U.S. trade deficit narrowed in March as demand for imports registered the biggest decline since the last recession was ending.
Investors’ caution Friday precedes what will likely be a busy week of economic news now that the flow of quarterly earnings reports is beginning to ebb.
“Next week I think will be a fairly important economic week,” Orlando said, pointing to expected reports on retail sales, retail inventories, industrial production and regional manufacturing.
Citigroup Inc. said it hopes to shed about $500 billion in assets and increase revenue by 9 percent over the next few years as it tries to recover from big losses tied to deterioration in the mortgage and credit markets. Citi, one of the Dow 30 stocks, fell 67 cents, or 2.8 percent, to $23.63.