Stocks Kick Off Week With Broad-Based Sell-Off

August 25, 2008 5:19 p.m. EST

New York, NY (AHN) - U.S. markets began the week lower as all three major indices opened down on Monday. Selling was broad-based throughout the session as declining stocks outpaced advancers by more than three to one.

The Dow Jones Industrials average fell 241 points or 2 percent as all 30 components finished Monday lower. American International Group (AIG) was the biggest laggard, down 5.5 percent to $18.78, a 13-year low for the stock. The weakness was sparked by a credit rating cut to negative by Fitch Ratings coupled with Credit Suisse reducing its earnings estimate for the insurer.

The S&P 500 shed 25 points or 1.95 percent as all 10 major economic sectors finished the session down 1 percent or more.

Tech stocks did not fair much better-the Nasdaq Composite fell 49 points or 2 percent. The big-cap tech stocks helped lead the way down with the Nasdaq 100 falling 2.1 percent on the session.

Although every sector finished lower, the financials, down 3.1 percent, sold off far more than the other industries. In addition to the weakness in AIG, investors were spooked by the failure of Columbian Bank & Trust Company, a regional bank that was taken over by regulators over the weekend. The bank is small but still showed investors that more failures are still possible.

Crude oil rose Monday, adding 59 cents a barrel to $115.12. The rise in the commodity did little to start a rally in the energy sector, as it finished 1.5 percent lower.

On the economic front, July existing home sales rose 3.1 percent from June. The result topped economists forecast for 1.1 percent growth. However, the median sales price for a home fell 1.3 percent from last month to $212,000.

Tuesday's session will see the release of August consumer confidence and the new home sales report for the month of July.