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Dow tanks on rate fears
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March 6, 2000: 5:56 p.m. ET
Greenspan speech routs Dow while Nasdaq 5,000 saved for another day
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NEW YORK (CNNfn) - U.S. stocks fell Monday after Federal Reserve Chairman Alan Greenspan warned he's not done raising interest rates to slow the economy's growth.
The drop robbed the Nasdaq composite index of its 15th record of the year and broke the Dow Jones industrial average's five-day winning streak.
Blue-chip stocks took the biggest hit, reversing course from last week, when the Dow staged its best performance since July.
Alan Greenspan "continued to rouse the fact that he's going to raise rates," Thomas Galvin, chief investment officer at Donaldson Lufkin & Jenrette, told CNN's Street Sweep.
That threat, Galvin said is "going to take a lot of excitement out of the old-economy stocks" perceived as more sensitive to tighter credit than are technology issues. 
That sensitivity showed Monday. The Dow Jones industrial average, home to many so-called old-economy stocks, fell 196.70 points, or nearly 2 percent, to 10,170.50. Paced by losses to Wal-Mart, Exxon-Mobil and American Express, the Dow was unable to maintain big gains from last week when it rose 5 percent, its best performance since July.
The tech heavy Nasdaq, meanwhile, shed 9.94 points to 4,904.85. The drop came on a day when the index hit an intraday peak of 4,980.15, just 20 points from the key 5,000.
"I think the (Nasdaq) has run-up dramatically year-to-date and just needs to take a pause here," Robert Burguyne, technology strategist at Monument Funds, told Street Sweep.
The broader S&P 500 fell 17.89 points to 1,391.28. 
More stocks fell than rose. Declining shares on the New York Stock Exchange beat advancing ones 1,912 to 1,118. Big Board volume topped 1 billion shares. Nasdaq losers beat winners 2,197 to 2,097. More than 2 billion shares changed hands.
In currency markets, the dollar rose against the euro but fell versus the yen. Treasury securities edged lower.
Greenspan makes 5,000 wait
The day's stocks losses came after Greenspan, during a speech on the New Economy at Boston College, warned that the Fed must remain vigilant to keep the white-hot economy from generating inflation.
The Fed raised interest rate four times since June, bringing its main lending rate to 5.75 percent. But tighter credit hasn't appreciably slowed the economy. The job market remains tight and consumer spending and confidence are strong.
Fears of more rate hikes this year hurt the Dow, members of which are more dependent upon banks to raise money. Stock investors fret that higher borrowing costs will crimp corporate profits.
Tony Dwyer, chief market strategist at Kirlin Holdings, said the sell-off was no surprise after a week when the Dow posted its best weekly performance since July and the Nasdaq climbed 7 percent.
Still, the Nasdaq, up more than 20 percent this year, looked ready to continue its stellar run for most of the session Monday, as investors poured money into the technology companies they bet would dramatically outgrow the rest of the economy.
It was just over a year ago, on Jan. 29, 1999, when the Nasdaq closed above 2,500. In the time the tech-heavy index took to nearly double, the Dow rose about 9 percent, as investors ignored many of the Dow's out-of favor "old-economy" stocks to chase tech.
That sentiment mostly held Monday. Yahoo! (YHOO: Research, Estimates) jumped 13-9/16 to 171-9/16 and Amazon.com (AMZN: Research, Estimates) gained 1-7/16 to 63-15/16.
Internet Capital Group (ICGE: Research, Estimates) soared 23-3/16 to 142-1/4, after Robertson Stephens upgraded the Internet investment firm to "strong buy" from "buy." The gains spread to CMGI (CMGI: Research, Estimates), another Internet investment firm, up 12-15/16 to 147.
"It's just a matter of time until we cross 5,000," Charles Blood, financial market strategist at Brown Brothers Harriman, told CNN's Street Sweep.
The Dow's losses, meanwhile, were paced by Wal-Mart (WMT: Research, Estimates), which slid 3 to 49-3/8, Exxon-Mobil (XOM: Research, Estimates), which fell 2-3/4 to 72-15/16 and American Express (AXP: Research, Estimates), which dropped 4-1/4 to 129-1/4.
Kmart earnings, deals
In other stocks. Kmart Corp. (KM: Research, Estimates) rose 3/16 to 8-3/4, after the nation's No. 3 retailer posted quarterly profit from continuing operations of $412 million, or 77 cents per diluted share, beating forecasts.
MGM Grand (MGM: Research, Estimates) gained 7/8 to 25-1/16, after announcing the acquisition of Mirage Resorts (MIR: Research, Estimates) for about $4.4 billion in cash Monday, up from the unsolicited $3.4 billion bid that Mirage rejected last week. Mirage gained 2-11/16 to 18-9/16.
Clear Channel Communications (CCU: Research, Estimates) fell 4-3/8 to 68 after the radio broadcaster said it is selling 72 radio stations in 27 markets as part of the process to gain regulatory approval for its merger with AMFM Inc. AMFM (AFM: Research, Estimates) fell 4-3/4 to 60-1/2.
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