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Dow industrials close sharply lower

NEW YORK: Blue chip stocks fell for a fourth straight session Wednesday as a jump in commodity prices to eight-year highs stoked fears of inflation and higher interest rates.

Traders scurried in the last hour of trading to position themselves for a report on wholesale prices mindful of the frenzied selloff that followed last Friday's jobs data for March.

The Dow Jones industrial average closed down 74.43 points, or 1.3 percent, at 5,485.98. Losers pounded gains by 1,577-838 on the New York Stock Exchange, where volume reached 473.8 million shares.

Stocks were also hurt by losses in the bond market, where interest rates edged up to just below the key 7 percent level. The benchmark 3-year U.S. Treasury bond tumbled 1-5/32, or $11.56 per $1,000 face amount, boosting its yield to 6.93 percent from 6.84 percent Tuesday.

Bonds were spooked as the Commodity Research Bureau index -- a barometer of commodity prices -- climbed 3.09 points, or 1.2 percent, to 258.91. Earlier in the day, the index hit an eight-year high of 259.10.

"There's a high degree of negative momentum in bonds, and stocks will be captive to bonds for the foreseeable future given the meagre earnings prospects on the equity side," said Charlie Crane of Spears Benzak Salomon & Farrell.

The Labour Department's Producer Price Index due Thursday is forecast to rise 0.4 percent in March after a 0.2 percent decline in February. But analysts said investors were girding for any nasty surprises.

Wall Street has been worried about the economy picking up pace and stoking inflation, since the report of a huge jump in non-farm payrolls in February. March job figures released last Friday supported that picture, raising fears that interest rates were headed higher.

After hitting a record high last Wednesday of 5,689.74, the market has fallen every session since then, losing nearly 204 points on the Dow, or 3.6 percent.

But Federal Reserve officials played down fears that the economy is on the verge of over-heating and that the central bank will need to raise interest rates quickly to keep inflation in check.

The tech-laden Nasdaq Composite succumbed to the selling in the broader market after hanging on to strong gains for much of the day. The index fell 3.87 to 1,105.28

Semiconductor stocks gained despite extremely weak computer chip orders in the March book-to-bill ratio, an industry gauge.

Among individual stocks, Motorola climbed 4-7/8 to 56-1/2 after reporting first-quarter earnings that topped expectations.

LSI Logic rose 1-3/4 to 31-7/8 and Texas Instruments rose 1/4 to 53-3/8. Intel slipped 1/8 to 61-3/4.

AT&T rose 7/8 to 61-3/8. Merrill raised its rating and said it believed a trading opportunity had developed in the stock.

Philip Morris lost 2 to 87-3/8. Lawyers suing the tobacco industry said they have obtained industry documents from a woman who charges that her ex-fiancee, a Philip Morris executive, got her hooked on cigarettes.

The Standard & Poor's composite index of 500 stocks fell 8.69 points to 633.50. The American Stock Exchange index fell 2.75 to 569.96.

The NYSE Composite index of all listed common stocks fell 4.20 to 340.93. The average share was down 48 cents.

The Wilshire Associates Equity Index -- the market value of NYSE, American and Nasdaq issues -- was 6,277.746, down 69.927 or 1.10 percent.-Reuter