Stocks decline in early trading
AIG, one of the 30 Dow Jones industrials, said in a regulatory filing today it would need to alter the way it values credit default swaps involving collateralized debt obligations. CDOs are funds that contain slices of bonds, some of which are backed by mortgages. The insurer said auditors found it "had a material weakness in its internal control over financial reporting and oversight" regarding how it valued certain credit default swaps.The filing raised concerns that there will be further losses at AIG, and that other financial companies might reveal similar problems. AIG fell $4.78, or 9.4 percent, to $45.90.
Meanwhile, Yahoo Inc.'s board decided to reject a $44.6 takeover offer from Microsoft Corp., a person familiar with the situation told The Associated Press. Microsoft, another Dow component, fell 50 cents, or 1.8 percent, to 28.04, while Yahoo rose 63 cents, or 2.2 percent, to $29.83.
The Dow fell 60.56, or 0.50 percent, to 12,121.57.
Dow Jones & Co. said it was replacing two of the blue chip index's 30 components -- Altria Group Inc. and Honeywell International Inc. -- with Bank of America Corp. and Chevron Corp., effective Feb. 19.
Broader stock indicators were also lower. The Standard & Poor's 500 index fell 5.19, or 0.39 percent, to 1,326.10, and the Nasdaq composite index fell 4.00, or 0.17 percent, to 2,300.85.
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