US stocks fell back for the first time in three sessions on Thursday as further losses at AIG hurt the financial sector and Wal-Mart posted disappointing July sales figures.

AIG, the insurer hit by massive subprime losses, slumped as much as 19.1 per cent, its biggest one-day drop in 39 years, after posting a larger-than-expected second-quarter loss of $5.4bn. By the close, the stock was down 18.1 per cent to $23.84.