NEW YORK - Wall Street extended its losses Thursday, a day after an inflation scare sent the Dow Jones industrial average on its biggest one-day drop in three years and put the Nasdaq composite index in the red for 2006.
Stocks drifted in a narrow range through most of the session but took a sharp turn lower in the last hour of trading, when a market already nervous about interest rates was unsettled by comments from Federal Reserve Bank of St. Louis President William Poole. Poole, who is not a voting member of the Fed's policy-making Federal Open Market Committee, reiterated the central bank's assessment that future rate hikes will depend on how the economy fares.
Concerns that rising inflation would send rates higher propelled the stock market sharply lower Wednesday, carrying the Dow down 214 points in the process.
"This market is just scared right now," said Ryan Larson, an equity trader at Voyageur Asset Management. "People are taking money off the table and no bets are being made because no one knows what to do right now."
According to preliminary calculations, the Dow dropped 77.32, or 0.69 percent, to 11,128.29. On Wednesday, the Dow had its worst session since sinking 307 points on March 24, 2003.
Broader stock indicators also declined. The Standard & Poor's 500 index lost 8.51, or 0.67 percent, to 1,261.81, and the Nasdaq sank 15.48, or 0.7 percent, to 2,180.32.
The more I look at this, the more worried I am that we're heading towards a period of high inflation and a slowing US economy--stagflation!
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