Stock, Bond Prices Fall; Dollar Soars --- Big Swings Continue As Investors Conclude Fed Won't Cut Rates
Stock prices continued a rapid retreat, joined by bonds. The U.S. dollar continued to rocket higher.</br></br>The Dow Jones Industrial Average tumbled 37.87 points to 2927.72 in active trading. The big drop was the second in as many trading days, and pulled the average more than 75 points below last week's record 3004.46.</br></br>Meanwhile, the dollar forged ahead to a 16-month high against the German mark, continuing the remarkable rally that began Thursday. Bond prices sank as traders anticipated big debt sales by Uncle Sam. The 30-year U.S. Treasury bond dropped nearly five-eighths of a point, or about $6.25 of each $1,000 face amount.</br></br>Analysts said the growing realization among investors that the Federal Reserve isn't likely to push short-term interest rates lower soon is behind the big moves in both stocks and the dollar. Without Fed action, many investors doubt a U.S. economic rebound will start soon or be very robust.</br></br>At the same time, the Fed's reluctance to lower short-term rates while interest rates abroad are falling makes the returns available in the U.S. more attractive to foreign investors, thus contributing to the strength of the U.S. currency.