U.S. Stocks Drop, Led by Energy; AIG Plunges

Finance sector revealed more leaks with American International Group Inc. after the company said it plans to raise $12.5 billion to cover write downs renewed concern more losses are coming in the financial industry. Meanwhile, Citigroup Inc. unveiled plans to shed about half a trillion dollars in assets.

Freeport-McMoRan Copper & Gold Inc. dropped after rising copper stockpiles signaled demand from China is slowing.

As of 2:06 p.m. EST, the Dow Jones Industrial Average slid 126.44 points, or 0.98 percent to 12,740.34, the Standard & Poor's 500 index lost 9.97 points, or 0.71 percent, to 1,387.71 and the Nasdaq Composite Index fell 6.70 points, or 0.27 percent, to 2,444.54.

Oil futures, climbed past $126 a barrel Friday amid geopolitical and supply fears and are onto score a weekly gain of more than 7 percent.

AIG, the world's largest insurer reported a first-quarter net loss of $7.81 billion, compared with earnings of $4.13 billion a year earlier. The company wrote down contracts it had sold to protect investors by $9.11 billion in the quarter to comply with rules that require the company to estimate their present market value.

Standard & Poor's and Fitch Ratings cut the company's credit grades after the announcement. AIG shares lost 8.3 percent to $40.48.

Citigroup fell 1.4 percent to $23.96 after announcing it will reduce about $400 billion in non-core assets over the next three years, as the largest U.S. bank seeks to boost efficiency and increase profit.

Freeport, the world's second-largest copper producer, dropped 3.8 percent to $113.60 Copper headed for a second weekly drop as rising stockpiles indicated China, the world's largest user, slowed purchases because of near-record prices.

Exxon Mobil, the largest U.S. energy company, slid 1.8 percent to $88.34.

Ford fell 1.6 percent after Kirk Kerkorian's Tracinda Corp. said it began its previously announced purchase of up to 20 million shares of the auto maker. The purchase for $8.50 per share is at a 13 percent premium to the stock's price when the deal was first announced last month. Tracinda will now own 5.5 percent of Ford's outstanding common stock.