Dow off 8.59

NEW YORK - U.S. stocks fell after Federal Reserve Chairman Alan Greenspan said equity prices have risen to levels that many people see as "well beyond the justifiable."

The Dow Jones industrial average dropped 8.59 to close at 10,946.82, but that was after being as low as 10,852 earlier in the day.

The Standard & Poor's 500 index was down 15.26 at 1,332.05, and the Nasdaq composite index was lower 62.17 at 2,472.28.

Decliners barely beat advancers on the New York Stock Exchange, with 1,475 up, 1,483 down and 570 unchanged. Volume came to 880.20 million shares, down from 895.39 million yesterday.

The NYSE composite index was down 4.32 at 636.22, and the American Stock Exchange composite index was up 2.32 at 787.81.

The Russell 2000 index, which reflects the performance of smaller-company stocks, fell 0.89 at 433.38.

Rising wage costs could force interest rates higher, threatening economic growth, Greenspan said at the Federal Reserve Bank of Chicago's annual banking conference.

"Interest rates are not likely to go down," said R. Lynn Yturri, manager of the $1.5 billion One Group Income Equity Fund. That means stock "prices will work their way down. The market is probably a little ahead of itself."

Greenspan's speech sent bond prices lower with the 30-year bond falling 1 6/32, or $11.88 per $1,000 bond, to 92 11/32, driving the yield up 9 basis points to 5.79 percent, the highest since June 4.

In Tokyo, meanwhile, the Nikkei stock market rose 599.08 points, or 3.59 percent, to 17,300.61 points - its highest close since Oct. 24, 1997.