Losses on investments also hit Netherlands-based insurance company Aegon (AEG - Get Report) causing it to report a 58% drop in profits for the second quarter. Investments in the U.S. credit markets and mortgage products were to blame as the stock fell 8.4% to $11.74.
The news of AIG's losses fueled concerns once again for Lehman Brothers' (LEH) investors causing the investment bank to slide 8% to $18.66. Worried shareholders sold off the stock as companies continue to report huge write downs with little positive news in the credit markets to deliver.
American Express (AXP - Get Report) shares fell nearly 3.1% to $36.80 after Moody's Investor Services placed its long-term ratings on review for a downgrade. Moody's is concerned about the card and travel services company's asset quality and lending exposures -- particularly in areas of the U.S., where home prices have dropped significantly. It also is concerned about the company's growth in card member spending, given the economic weakness in the U.S. The long term ratings of American Express are currently rated at A1 for the holding company and Aa3 for its operating subsidiaries. If the ratings of American Express were to be lowered, they would most likely be lowered by one notch, Moody's said.
Overall the NYSE Financial Sectorindex declined 164 to 6,456.98.But it wasn't all bad news, there were some winners on Thursday. MF Global (MF) jumped 15% in early trading after its net income came in better-than-expected. Even though the fiscal first quarter earnings dropped 80% from the previous year, the adjusted net income came in ahead of estimates. Lately, the stock was gaining 5.6% to $6.77. And finally, the big winner for the day was Nationwide Financial Services (NFS)which shot up 10% to $51.08. The insurance and annuity product company agreed to a $2.4 billion buyout by its parent company Nationwide Mutual Insurance. The bid was initially valued at $2.2 billion.