A historic surge in crude oil prices and new evidence of the damage inflicted by the credit crisis darkened the mood on Wall Street this week, sending the stock market to its first weekly loss in a month. The latest negative news on Friday came way of oil's fifth consecutive record close and insurance giant AIG's $7.8 billion quarterly loss.

Today's Market

The Dow Jones Industrial Average slid 120.90 points, or 0.94% to 12745.88, the Standard & Poor’s 500 index lost 9.39 points, or 0.67%, to 1388.29 and the Nasdaq Composite Index fell 5.72 points, or 0.23%, to 2445.52. The consumer-friendly Fox 50 dropped 7.00 points, or 0.71%, to 983.53.

The stock market was unable to climb out of negative territory and closed near its lowest levels of the session. Friday's 100-point decline sent Wall Street to its second triple-digit tumble in three days, including a 200-point loss on Wednesday. 

AIG (AIG) led the decliners on the Dow, tumbling 8.8% on its disappointing quarterly results. Also, General Motors (GM) took a 4.1% hit and Citigroup (C) dropped about 2.8% after its analyst meeting.

Oil futures, which unexpectedly surged past $125 a barrel this week amid geopolitical and supply fears, closed in New York up $2.27 at $125.96 a barrel -- the fifth record day for crude. In fact, crude prices have jumped $11 in May alone. 

Yesterday OPEC President Chakib Khelil blamed soaring oil prices on “the considerable depreciation of the U.S. Dollar” and also predicted $200 a barrel as early as this summer. Goldman Sachs (GS) made a similar prediction, warning of $150 to $200 oil in the next six months to 24 months.

Meanwhile, the latest quarterly results from financial companies failed to support the idea that the credit crisis is more than halfway over. That line of thinking has been endorsed by many banking executives and even Treasury Secretary Henry Paulson this week.

While Wall Street was expecting AIG (AIG) to post a loss, they weren't expecting this large of a loss. The insurer lost $7.81 billion, or $3.09 per share, last quarter, compared with earnings of $1.58 per share, or $4.13 billion from a year ago. Excluding one-item items, AIG lost $1.41 a share, well below the 76 cent loss analysts polled by Thomson Reuters were looking for. 

The results reflect the depth and breadth of the credit crisis, which has hammered many large and small banks since the summer. AIG was hit by $9.11 billion in writedowns on its credit default swap portfolio, which has been hammered by the freeze in the credit markets. The company’s investment portfolio, which includes mortgage-related securities, reported a loss of $6.09 billion

To counter these huge losses, AIG announced plans to raise $12.5 billion to shore up its balance sheet. Much of that fundraising effort stems from a $7.5 billion common stock offering.

“We’re feeling betrayed… It’s just very disappointing, worse than expected," Ted Weisberg of Seaport Securities told FOX Business. "Until [the financial] sector starts to do better, I think the market is going to struggle. A lot of people thought we were past all the big problems, but clearly they have a big problem.”

Corporate Movers

Circuit City (CC) soared 5.8% after it said it's open to selling itself. The electronics retailer gave Blockbuster (BBI) the green light to look further into its buyout offer. The move comes after billionaire activist investor Carl Icahn told Circuit City he is prepared to buy the company if Blockbuster's plan falls through. Also, Circuit City said it has hired Goldman Sachs (GS) to advise the company on its options, which include selling itself to Blockbuster. 

Citigroup's (C) revealed plans to sell up to $500 billion in assets over the next few years to combat previous writedowns and build capital. The plans were revealed at Citi's analyst meeting Friday morning. 

Ford (F) fell 1.2% after Kirk Kerkorian's Tracinda Corp. said it began its previously announced purchase of up to 20 million shares of the auto maker. The purchase for $8.50 per share is at a 13% premium to the stock's price when the deal was first announced last month. Tracinda would own 5.5% of Ford's outstanding common stock if it completes the 20 million share purchase. 

Fannie Mae (FNM), the government-sponsored mortgage buyer, announced plans for a $4.5 billion stock offering late Thursday. The move comes just days after Fannie revealed a $2.2 billion first-quarter loss and announced it would raise $6 billion. Fannie said it plans to sell 82 million shares of common stock at $27.50 per share, a slight discount to the stock's closing price Thursday. 

Bear Stearns (BSC) investment bankers may soon learn their fate, the New York Post reported Friday. A decision is expected over the next two weeks on how many Bear investment bankers will move to JPMorgan Chase (JPM), the newspaper said. Shareholders are expected to approve JPMorgan's $2 per share buyout of the once venerable Wall Street firm on May 29. 

Activision (ATVI) rose 13.7% to a 52-week high after the video game publisher beat the Street in its fiscal fourth-quarter. The maker of "Guitar Hero" and "Call of Duty" reported adjusted earnings of 17 cents per share, easily beating the 5 cents analysts polled by Thomson Reuters were looking for. Acitvision's revenue surged 93% to $602.5 million, also topping estimates. 

IAC/InterActiveCorp's. (IACI) decision to break itself up is being challenged again by Liberty Media Corp., according to The Wall Street Journal. On Wednesday Liberty appealed a recent court ruling that cleared the path for Barry Diller's IAC to spin-off its Ticketmaster, LendingTree, HSN home-shipping network and Interval International businesses. 

Priceline.com (PCLN) surged 11.5% to a price unseen since 2000 after it beat the Street with an $18.2 million profit and released a bullish earnings outlook. The online travel company's adjusted-earnings of 76 cents per share topped estimates of 60 cents. After the results and profit outlook analysts at Citigroup, Merrill Lynch, Bank of America, Piper Jaffray and Goldman upgraded the stock's price target to as high as $175.

Data Dump 

The U.S. trade deficit decreased by 5.7% to $58.21 billion, the Commerce Department said Friday. The March deficit was smaller than Wall Street expectations of a $61.50 billion shortfall.

World Markets

The Dow Jones Euro 50, the 50 largest companies of Europe, fell 54.27 points, or 1.41%, to 3801.59. London's FTSE 100 dropped 66.10 points, or 1.05%, to 6204.70.

France's CAC 40 Index lost 95.02 points, or 1.88%, to 4960.56 and Germany's DAX declined 68.73 points, or 0.97%, to 7003.17.

In Asia, Hong Kong's Hang Seng Index fell 386.62 points, or 1.52%, to 25063.17. Japan's Nikkei 225 lost 287.92 points, or 2.06%, to 13655.34.