NEW YORK " Stocks turned higher Tuesday after CNBC reported that the government is considering extending aid to troubled insurer American International Group Inc.
A partial recovery in shares of AIG and several other financial companies helped the sector show signs of life a day after leading Wall Street to its worst session in years. Investors also grew hopeful about a Federal Reserve interest rate cut.
Worries about AIG's well-being intensified Monday and early Tuesday after several ratings agencies downgraded the company. Lower ratings can add to the amount of money the already cash-strapped company has to set aside. Investors fear that a failure by the world's largest insurer would touch off a wave of financial turmoil.
But CNBC's report said the government is at least considering extending a financial lifeline to the company. AIG fell 66 cents, or 14 percent, to $4.10 after being down nearly 75 percent in earlier trading.