Stocks slide on eve
of Fed’s rate decision

NEW YORK » Wall Street's chronic inflation fears pushed stocks lower yesterday as investors nervously awaited the Federal Reserve's latest take on pricing pressures and interest rates.

High oil prices, which briefly topped $57 per barrel before retreating, also weighed on the market.

With oil at near-record levels, investors are concerned that the economy is caught in a bind between surging energy prices, which could trickle down through the rest of the economy, and higher interest rates that could make capital harder to come by for businesses seeking to expand.

Oil prices fell somewhat after an early spike as OPEC publicly mulled another production increase in an attempt to meet rising demand. However, crude remained well above $56 per barrel and appeared unlikely to drop in the short term.

A barrel of light, sweet crude settled at $56.62, down 10 cents, on the New York Mercantile Exchange.

"The inflation fears are out there, and they're at an elevated level today," said Jay Suskind, head trader at Ryan Beck & Co. "There's a lot of fear out there over higher interest rates, and that oil bubble hasn't popped yet. The (stock) buyers just aren't coming out to play. They're hiding."

The Dow Jones industrial average fell 64.28, or 0.6 percent, to 10,565.39. It was the lowest close for the Dow since Feb. 1.

Broader stock indicators also lost ground. The Standard & Poor's 500 index was down 5.87, or 0.49 percent, at 1,183.78, and the Nasdaq composite index lost 0.28, or 0.01 percent, to 2,007.51.

Declining issues outnumbered advancers by more than 2-to-1 on the New York Stock Exchange, where preliminary consolidated volume came to 1.84 billion shares, compared with 2.78 billion on Friday.

Friday's volume was inflated by the quarterly expiration of options and futures contracts, and by a rebalancing of the S&P 500.

The Russell 2000 index of smaller companies was down 1.00, or 0.16 percent, at 621.57.

The dollar rose sharply against most major currencies as the expectation of a more aggressive Fed bolstered confidence in the greenback.

Bonds moved slightly lower, with the yield on the 10-year Treasury note rising to 4.52 percent from 4.51 percent late Friday.

Gold prices fell slightly.

Despite the concern about higher interest rates, most analysts felt the Fed would not raise rates beyond expectations after its meeting today, though many felt the Fed would telegraph more aggressive hikes in its policy statement.