By Caroline Valetkevitch
NEW YORK (Reuters) - Stocks sank on Friday as another round of weak economic data added to U.S. recession fears and a record loss at AIG
Major stock indexes fell 2 percent.
Adding to the gloom, Atlanta Federal Reserve Bank President Dennis Lockhart said home prices and credit card debt could further limit consumer spending, a key element of economic activity.
But a survey showed earlier U.S. consumer sentiment was at its lowest in 16 years and a separate report said business conditions in the Midwest were the weakest in more than six years.
Financial service company shares led the broad market lower after dismal results from insurer American International Group Inc late on Thursday. AIG fell 7.2 percent to $46.55 and was among the top drag on the Dow and the S&P 500. Shares of Bank of America Corp
"We had some good news earlier in the week, but the market is stuck now. It's been a little of everything. AIG kind of spooked the market ... economic news has not been good, either. (Lockhart) might have disappointed a little bit," said Todd Leone, head of listed trading, Cowen & Co. in New York. "It's not a pretty scenario.
The Dow Jones industrial average <.DJI> dropped 269.63 points, or 2.14 percent, to 12,312.55. The Standard & Poor's 500 Index <.SPX> fell 31.50 points, or 2.30 percent, to 1,336.18. The Nasdaq Composite Index <.IXIC> declined 50.40 points, or 2.16 percent, to 2,281.17.
On the Nasdaq, Dell Inc
AIG posted a $5.29 billion fourth-quarter loss, hurt by write-downs of securities linked to bad mortgage bets.
U.S. Midwest business activity contracted sharply in February, the National Association of Purchasing Managers-Chicago said.
In other data, the Reuters/University of Michigan Surveys of Consumers showed that sentiment slumped to a 16-year low in February, hitting levels that usually sound alarm bells for recession.
(Editing by Kenneth Barry)
