Dow Jones: 6448.27 (-101.10)

THE Dow finished on Tuesday with its sharpest decline since July, hit by weak bond markets and a flurry of last minute profittaking. A large portion of the losses came in the last hour of trading, well after stocks had been dealt a blow by the latest set of US economic indicators, which affected the bond markets.

The Commerce Department reported a greater than expected 14.2 per cent rise in sales of single family homes in November, while the Conference Board's December consumer confidence index jumped by over four points to 113.8. Both reports suggested a strong economy and that interest rates might need to move higher.

The news sent bond prices sharply lower and share prices fell in tandem. The selling was largely focused on larger stocks and financial stocks were particularly hard hit. The decline put a small dent in the Dow's rise, but the index still ended the year 26 per cent higher.