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Stock markets rattled by interest rate concerns

Monday, May 10, 2004 | 10:50 a.m.

NEW YORK -- Stocks plunged this morning on persistent interest rate worries, sending the Dow Jones industrials down more than 100 points and going below 10,000 for the first time since December.

Wall Street suffered its third straight day of heavy selling, gathering momentum in this latest decline from steep losses on markets around the world. Equity traders were rattled by Friday's employment report from the Labor Department -- the U.S. gained 288,000 new jobs in April -- and feared the news would prompt the Federal Reserve to raise interest rates as early as next month.

The Dow was down 148.54, or 1.5 percent, at 9,968.80 at midday in New York, with heavy volume on the New York Stock Exchange; it had lost 123.92 on Friday. The index had last fallen below 10,000 on Dec. 16.

Broader stock indicators were also sharply lower. The Standard & Poor's 500 index was down 14.80, or 1.4 percent, at 1,083.90, after losing 15.29 Friday. The Nasdaq composite index dropped 29.94, or 1.6 percent, to 1,888.02. The Nasdaq shed 19.78 on Friday, and fell below 1,900 in intraday trading for the first time since Nov. 21.

The markets were still open as today's Las Vegas Sun went to press. Details on how the markets closed will be posted on the Sun's Web site, lasvegassun.com

The major overseas indexes also fell sharply, with the main Japanese average sinking nearly 5 percent, setting the tone for a difficult day on U.S. markets.

Wall Street has been gripped by a spasm of selling for four weeks as economic indicators grew more positive and investors worried that corporate profits would be eroded by an ensuing series of interest rate hikes. Along the way, the market completely ignored a stellar batch of first-quarter earnings reports.

"Long-term, the markets still look at corporate fundamentals, earnings, that sort of thing," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "But we do have some inflation and interest rate fears in play which could keep things lower, at least for now."

Investors have some incentive to sell to lock in gains, he added. "Stocks have done very, very well over the past 12 months, and this could be as good as it gets for the next few months," he said.

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