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. Last Updated: 07/27/2016

Interest Rate Fears Send U.S. Market Tumbling

NEW YORK -- The U.S. stock market fell sharply Monday, resuming last week's sell-off on speculation that interest rates will continue to climb higher, which could stun consumer spending and hurt corporate earnings.


At noon eastern time, the Dow Jones industrial average slid 108 points to 6,633, adding to its 140-point tumble on Thursday, the last trading session during the Easter holiday-shortened week. Financial markets were closed for Good Friday.


Most major European markets were closed Monday for the Easter holiday.


In the broader U.S. market, declining issues beat advances by a 2-1 margin.


"People are on edge after Thursday's decline," said Peter Cardillo, director of research at Westfalia Investments.


The stock market was also facing the prospect that the rise in interest rates was bringing more competition from bonds for investment money.


In early trading, the key 30-year Treasury bond was steady, and its yield held at Thursday's close of 7.09 percent -- the highest since mid-September of 1996. Bond yields above 7 percent tend to draw money away from stocks and into bonds.


Analysts said investors were scrutinizing every piece of economic data for an indication as to when the Federal Reserve would move on interest rates after raising a key rate earlier last week.


The government reported Monday that February personal income rose a higher-than-forecast 0.9 percent, the largest gain in eight months, compared with a revised 0.4 percent increase the previous month. Consumption rose a smaller-than-expected 0.3 percent, compared with a revised 0.1 percent gain in January.


"The data will keep the market on the defensive," Cardillo said. "If the numbers continue to strengthen, it will raise questions about when the Federal Reserve will raise interest rates again."


The Nasdaq Composite index fell 21 points to 1,229, and the Standard & Poor's composite index of 500 stocks fell 11 to 763.


Asian stock markets, meanwhile, closed mostly lower Monday, with the key index in Tokyo falling for the third consecutive session as measures to stimulate the Japanese real estate market stirred little enthusiasm.


Tokyo's 225-issue Nikkei Stock Average fell 186.32 points, or 1.02 percent, closing at 18,003.40. The index had slipped 20.70 points, or 0.11 percent, on Friday.


The Tokyo Stock Price Index of all issues listed on the first section lost 5.45 points, or 0.40 percent, to 1,373.26. It had declined 3.87 points, or 0.28 percent, on Friday.


Dealers said there was little impact from a deregulation package announced Friday by the Japanese government.


There was also not much enthusiasm about measures to support the real estate market that were announced Monday afternoon.


Troubles surrounding Nippon Credit Bank also weighed on banking shares. Reports said the president of the bank might resign this week in order to take responsibility for the bank's deteriorating condition. (Reuters, AP)


Meanwhile, the U.S. dollar was quoted at 123.97 yen in late afternoon, up 0.31 yen from late Friday in Tokyo.