Wall Street plummeted to a multi-year low on Monday with the Dow Jones average dropping almost 300 points to below 6,800 amid global sell-off.

The Dow Jones average was down 299.64, or 4.24 percent, to 6,763.29, the lowest close since April 1997. S&P 500 lost 34.27, or 4.66 percent, to 700.82, the lowest since December 1996. The Nasdaq index declined 54.99, or 3.99 percent, to 1,322.85.

Financial black hole

The American International Group (AIG), the largest US insurer, reported on Monday that it had lost US$61.7 billion, or 22.95 dollars per diluted share, in the fourth quarter. It is the biggest quarterly loss in US corporate history.

On the same day, the US government said it would provide the insurer with an additional aid of 30 billion dollars as part of a new government rescue bid.

To stave off collapse of the troubled insurance giant, the US government had already pumped some 150 billion dollars into the company.

However, in an interview with CNBC on Monday, AIG CEO Edward Liddy said that the insurer is far more stable and secure than it was last fall but it's "difficult to say" if the company will need even more money from the government in the future.

"AIG is like a black hole in the US financial system, absorbing billions of dollars of taxpayer money, but still fails to restore," said Benjamine Wey, a manager from a New York-based investment bank.

Fears about the financial woes increased last week after the US government reached an equity conversion agreement with Citigroup.

Bank stocks were hammered on Monday as HSBC, the largest European bank, reported a 70-percent decline in net profit. HSBC also announced it is shuttering hundreds of branches in the United States that specialize in mortgage and consumer lending, and will cut 6,100 jobs in the states.

Shares of HSBC plunged 18.82 percent while Citi was down 20 percent at the closing.

Mixed economic data

The US Commerce Department said consumer spending rose 0.6 percent in January, better than the 0.4 percent gain that economists had expected. However, the increase is expected to be fleeting given all the problems facing the economy.

Personal incomes rose 0.4 percent in January, partly reflecting the cost-of-living adjustments provided to millions of Social Security recipients. The personal savings rate surged to 5 percent, the highest level since 1995 as consumers continued to sock away more of their incomes amid the deepening recession.