Dow off 125.7

NEW YORK -- While Internet stocks soared on the promise of a strong Christmas, the broader market slumped today due to a more immediate event -- a possible interest rate increase next week. The Dow Jones industrial average fell 125.70, or 1,13 percent, to close at 10,991.38.

Broader stock indicators also ended lower, although the technology-dominated Nasdaq composite index contained its losses as Dell Computer Corp. and many Internet issues rose sharply. The Standard & Poor's 500 fell 11.32 to 1,332.84, and the Nasdaq composite index fell 13.49 to 2,657.73.

Decliners beat advancers by a 3-to-2 margin on the New York Stock Exchange, with 1,781 down, 1,176 up and 549 unchanged. NYSE volume totaled 681.30 million shares vs. 695.05 million yesterday.

The NYSE composite index fell 5.06 to 623.65, but the American Stock Exchange composite index rose 1.41 to 783.92. The Russell 2000 index fell 2.90 to 433.10.

U.S. bonds, meanwhile, rose for a fourth day, driving yields below 6 percent for the first time in a month, on expectations the Federal Reserve won't need to raise interest rates more than once to curb inflation.

The 30-year bond rose 1/4, or $2.50 per $1,000 face amount, after falling almost 1/2 point in morning trading. Its yield fell 2 basis points to 5.99 percent.

Concerns that the Federal Reserve will raise interest rates to prevent inflation from accelerating have hurt stocks and bonds over the past month.

Now, analysts believe the market may not be able to sustain any new rallies until after Aug. 24, when the Fed will announce its decision on interest rates.