Dow off 32.56
on inflation fear

NEW YORK -- Leading stock averages edged lower today as nagging worries about inflation boosted interest rates to an unsettling level in the bond market.

The Dow Jones industrial average quickly surrendered an early 19-point gain and then drifted through the session with a modest deficit, closing down 32.56 at 7,258.13.

Advancers outnumbered decliners by a small margin on the New York Stock Exchange, with 1,291 up, 1,201 down and 879 unchanged. NYSE volume was 426.94 million shares vs. 537.04 million yesterday.

The Standard & Poor's 500-stock list fell 3.69 to 835.66, and the NYSE's composite index fell 1.55 to 434.66. The Nasdaq composite index fell 1.16 to 1,372.59, and the American Stock Exchange composite index rose 1.65 to 593.73.

Most broad-market measures also gave back some early gains as bonds struggled again, briefly boosting the closely watched yield on the 30-year Treasury above 7 percent, a level at which the safety of fixed-income investments can seem more appealing than stocks.

Yesterday the long-bond yield -- a key influence on borrowing costs -- rose from 6.90 percent to 6.95 percent as some strong export data cast doubt on the Federal Reserve's apparent determination that economic activity may be slowing enough to keep inflationary pressures in check.

Fed officials moved to ease market demand in late March by boosting one of the central bank's key lending rates, but passed on a chance to nudge rates higher again at a policy meeting on Tuesday.