Stocks fell yesterday after Federal Reserve Chairman Alan Greenspan warned that interest rates may have to rise if job growth and demand fail to slow, surprising investors who were hoping the central banker would talk about lowering interest rates.
The Dow Jones industrial average ended down 105.56 points, or 1.1 per cent, at 9,190.19.
In the broad market, declining issues beat advances 20 to 8 on moderate volume of 663 million shares on the New York Stock Exchange. The Nasdaq composite index fell 35.16 points, or 1.7 per cent, to 1,979.09, snapping a string of nine consecutive sessions of record closes.
Greenspan's statements in testimony to Congress echoed longstanding policy at the Fed. But analysts said the tone of the Fed chief's comments was unnerving, given market expectations that recent data - such as a much wider-than-expected trade deficit - had reduced the likelihood of higher interest rates.
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