US stocks plunge on rate fears

Wall Street extended its month-long retreat today as inflation fears kept investors on edge following hefty losses last week – the worst so far this year.

A late sell-off dragged the Dow Jones industrials down almost 100 points and put the Nasdaq composite index at a seven-month low.

Investors have been reluctant to buy stocks since the Federal Reserve said in early May that record oil prices could require higher interest rates to keep prices from climbing elsewhere.

Downbeat inflation comments from Federal Reserve Bank of Cleveland President Sandra Pianalto today was another reminder for an already uneasy market.

But recent signs of slowing economic growth now has Wall Street worried that too many rate hikes could send the economy sliding. Trading was expected to be skittish this week ahead of wholesale and consumer price data, which might bring clues about whether the Fed will boost rates again at its June 28-29 meeting.

“There are certainly some positives in the economy to point to, but until we get some more clarity on the battle between inflation and economic growth, the markets are likely to remain volatile,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC.

The Dow tumbled 99.34, or 0.91%, to 10,792.58, its lowest close since hitting 10,749.76 on Feb. 7.

The blue-chip index shed 355 points last week and is 7.3 percent below its six-year high of 11,642.98, reached May 10.

Broader stock indicators also retreated. The Standard & Poor’s 500 index slid 15.89, or 1.27%, to 1,236.41, and the Nasdaq lost 43.74, or 2.05%, to 2,091.32.