Stocks in New York staged a sharp decline yesterday as fresh inflation news set off a wave of "sell" cries on Wall Street, with banks, industrial and technology companies bearing the brunt of the bad news.

The Dow Jones tumbled 289.15 points, or 2.6 per cent, to 10,738.87, led lower by General Electric, General Motors and JP Morgan. The selling spree brought the week's loss to 512.84 points and left the Dow at its lowest level since November 11th.

An underlying worry of many investors is an expectation that the Federal Reserve will raise interest rates when it meets next week, and again later in the year, curbing business expansion by making it more expensive to borrow money.

The Nasdaq composite index suffered its second-biggest point drop ever, by 152.61 to 3,886.95, as investors dumped shares of the usual favourites like Qualcomm , Intel and Oracle. The broad market indicator, the Standard and Poor's 500, also fell by 38.41, or 2.7 per cent, to 1,360.15.