NEW YORK (CNNfn) - Severe losses continued to weigh down U.S. stock markets at midday Thursday after strong retail sales data and an upcoming employment report rattled investors' nerves -- and triggered renewed concern about the possibility of rising inflation and higher interest rates to follow.
Shortly before 11:30 a.m. ET, the Dow Jones industrial average lost 157.99 points, or 1.4 percent, to 10,779.89. On the New York Stock Exchange, losers charged ahead of gainers 2,086 to 570 as 268 million shares changed hands.
The Nasdaq composite fell 27.24 points, or 1 percent, to 2,723.56, and the S&P 500 index declined 18.92, or 1.3 percent, to 1,312.15.
The bond market also suffered losses, pressured by a weakening dollar, the strong August chain-store sales reports, and speculation that Friday's August employment report could show unexpected strength and persuade the Federal Reserve that another interest rate increase is necessary before the end of the year. The bellwether 30-year Treasury bond dropped 23/32 of a point in price, raising the yield to 6.13 percent from Thursday's 6.08 percent.
The dollar's slide against the yen continued and the currency was also lower against the euro.
In the stock market, investors sold indiscriminately, dumping interest rate-sensitive issues such as banking and technology shares, but also getting rid of retail stocks, some of which were backed by strong sales data for August.
Among the Dow stocks, shares of Wal-Mart (WMT) slipped 1/2 to 44-1/2 even after the nation's largest retailer reported an 8.7 percent jump in same store sales in August.
But the other retail member of the 30 blue chips index, Sears (S) saw its stock tumble 4-1/16, or almost 11 percent, to 33-1/8 after the company said weak sales would result in lower-than-expected profits for the third quarter and the full year. Sears' said same-store sales inched up a mere 0.1 percent in August.
The bearish mood spread well beyond retail stocks, as financial services companies, Wall Street's most interest rate-sensitive sector, took in more losses.
Shares of American Express (AXP) fell 3-15/16 to 135-1/16, Citigroup (C) shed 1-5/16 to 43-9/16, and J.P. Morgan (JPM) dropped 4-1/16 to 125-9/16. The three make up the financial portion of the Dow industrials.
Outside the Dow, shares of Republic New York (RNB) tumbled 6-9/16, or more than 9 percent, to 62-13/16 after a unit of the company, Republic New York Securities, suspended its chief executive and ousted the management of its futures division amid an ongoing investigation into the company's dealings with a Japanese client. Despite the scandal ripping through the bank, HSBC Holdings said it remains committed to its pending $10.3 billion merger with Republic.
Techs take a hit
In the technology sector, also heavily dependent on the direction and level of interest rates, selling prevailed as well.
Shares of Dow member IBM (IBM) dropped 2-5/16 to 124-15/16 and fellow blue chip Hewlett Packard (HWP) shed 1-3/16 to 103-13/16.
Fear of stiff competition added to interest rate jitters to drive the stock of Rambus (RMBS), which develops technology-facilitating communication between computer chips, down 7-5/8 to 87-5/8. The world's leading chip maker, Intel (INTC), said it would start supporting a rival technology to be announced in the first half of 2000. So far Intel has used Rambus' technology exclusively. Intel's shares eased 9/16 to 82-7/8.
Other major technology stocks also headed lower, with Microsoft (MSFT) losing 1/2 to 91-7/8, Cisco Systems (CSCO) dropping 1-1/8 to 67-13/16 and Dell (DELL) down 15/16 to 46-15/16.