Dow off 130
on inflation fear

NEW YORK -- Stocks pulled back sharply today as a surprisingly strong reading on consumer sentiment fanned some lingering worries about inflationary pressures.

The Dow Jones industrial average fell 130.31 to 7,890.46, erasing all of this week's gains and leaving the blue-chip barometer with a loss of 31.36 for the five sessions.

Decliners outnumbered advancers by a 7-to-3 margin on the New York Stock Exchange, with 863 up, 2,035 down and 517 unchanged. NYSE volume was 585.62 million shares vs. 629.07 million yesterday.

The Standard & Poor's 500-stock list fell 16.31 to 915.30, and the NYSE composite index fell 6.99 to 475.97.

The Nasdaq composite index fell 20.86 to 1,547.99, and the American Stock Exchange composite index fell 3.75 to 633.59.

Broad-market indexes also posted steep losses as investors moved to secure some gains from this week's record-setting advance, which put the Dow above 8,000 for the first time.

The pullback came as interest rates rose in the bond market after a University of Michigan report unexpectedly revealed a sharp improvement in consumer sentiment during the first half of July.

Stocks have been rallying since mid-April amid signs that the vigorous pace of the economy was slowing enough to keep a lid on inflation.

A sharp pickup in consumer activity, however, could force the Federal Reserve to raise its short-

term lending rates, easing market demand, but potentially hurting company profits.