Dow falls 120

Bloomberg News

NEW YORK - The Dow Jones industrial average fell, led by J.P. Morgan & Co. after a retail sales report suggested the economy is growing fast enough to prompt the Federal Reserve to raise interest rates.

The Dow average fell 120.00, or 1.1 percent, to close at 10,910.33.

The Standard & Poor's 500 fell 7.84 to 1,336.29, and the Nasdaq composite index rose 23.52 to 2,868.29.

Decliners beat advancers by a 5-to-2 margin on the New York Stock Exchange, with 2,143 down, 848 up and 503 unchanged. NYSE volume totaled 727.22 million shares vs. 654.73 million yesterday.

The American Stock Exchange composite index dropped 3.02 to 801.48 and the Russell 2000 index of smaller companies fell 1.41 to 438.24.

The 30-year U.S. Treasury bond fell 27/32 point, or $8.44 per $1,000 face value; its yield climbed 6 basis points to 6.11 percent.

Qualcomm Inc. led the Nasdaq after the maker of cell phones said it will meet or beat fourth-quarter profit estimates.

But the stock market is in "interest-rate purgatory," said Noah Blackstein, who oversees a $55 million U.S. stock fund for Toronto-based Dynamic Mutual Funds.

"As long as there is any question about interest rates, I'm steering clear of financial stocks," said Patricia d'Ille, who manages a $56 million global equity fund at Bacot-Allain Gestion. Instead she's buying semiconductor companies such as Applied Materials Inc. and Intel Corp.

Retail sales had their largest gain in six months. August sales grew 1.2 percent, more than the 0.7 percent forecast by economists surveyed by Bloomberg News.