US mkts tumble; Dow closes below 7K, S&P @ 700 crashes over 4% on AIGs Q4 $61.7 bn loss and Asia trading lower; Hang Seng plunges 3.8%

US markets ended at 12-year lows, as another bailout of insurance giant AIG stirred fears about the stability of the US’ financial system. The Dow closed below 7,000 for the first time since May 1997.

Financial stocks like Citigroup tumbled 20%. Investor sentiment got hit as AIG posted a USD 61.7 billion quarterly loss prompting the government to pump an additional USD 30 billion in fresh capital into the insurance giant — the third such cash infusion

On closing bell, Dow dropped 4.2% to close at 6,763.29. The S&P 500 shed 4.7% to close at 700.82. The Nasdaq dropped 4% ending at 1,322.85.