AIG's $61.7 Billion Loss Sends Markets Into Tailspin

American International Group's massive $61.7 billion loss sent the markets into a tailspin during the midday with the Dow slumping 220 points to 6843.  Nasdaq plummeted 38 points to 1340.

On the upside

The U. S. Supreme Court refused to review lawsuits filed by military personnel and Vietnamese nationals against Dow Chemical (NYSE: DOW) and other chemical companies over the use of Agent Orange in the Vietnam War.

Bargain hunters lifted shares of Synta Pharmaceucticals (Nasdaq: SNTA).  The stock price collapsed last week after the company suspended a late stage clinical trial of its cancer treatment elesclomol due to safety concerns

On the downside

KKR Financial Holdings (NYSE: KFN) swung to a fourth quarter loss, cancelled its dividend for the fourth quarter and will most likely suspend dividends for the rest of 2009.

Louisiana-Pacific (NYSE: LPX) blamed the slumping housing market for widening fourth quarter losses.

Shares of Bank of America (NYSE: BAC) and Citigroup (NYSE: C) tumbled over continued bank nationalization concerns.

Moody's Investors Service may lower its ratings for Sallie Mae (NYSE: SLM) after President Obama proposed using the Department of Education to administer all student loans.

In the broad market, declining issues outpaced advancers by a margin of nearly 9 to 1 on the NYSE and by nearly 5 to 1 on Nasdaq.  The Russell 2000 which tracks small cap stocks plunged 15 points to 374.