Dow falls 49

Bloomberg News

NEW YORK - U.S. stocks fell with bonds on concern the economy is growing fast enough to prompt the Federal Reserve to raise interest rates for a fourth time since June. Financial shares led the decline.

"The bond market says there's inflation, and the stock market is starting to believe there could be four to five more rate hikes down the road," said Mark Coffelt, president at First Austin Capital Management in Texas.

The Dow Jones industrial average fell 49.24 to close at 10,883.09. The Standard & Poor's 500 index lost 9.32 to 1,410.71. The Nasdaq composite index dropped 27.01 to 3,268.91, erasing a 28-point gain that had propelled it to a 14th straight intraday record. Qualcomm Inc. led the decline.

Decliners beat advancers by a 3-to-2 margin on the New York Stock Exchange, with 1,867 down, 1,222 up and 481 unchanged. NYSE volume was 938.69 million shares as of 4 p.m., vs. 903.5 million yesterday. The NYSE composite slipped 3.11 to 644.51; the American Stock Exchange index dropped 3.61 at 823.40; but the Russell 2000 index rose 0.19 to 457.07.

Stocks fell after the government said the inflation rate in the 12 months through October matched the 21/2-year high set a month earlier. That send bonds tumbling.

Thirty-year bonds fell 31/32 point, or $9.69 per $1,000 face amount; its yield rose 7 basis points to 6.13 percent, the highest level in two weeks. Two-year yields rose 4 basis points to 5.87 percent.

"When you have bonds off, it's telling you that people expect further interest rate increases and it's bad news for stocks," said Gary Shilling, president of A. Gary Shilling & Co. in Springfield, N.J.