Inflation Fears Drive Stocks, Bonds Lower
Inflation fears ruled the markets again, driving down stocks and bonds as investors await price reports to be released today and Wednesday.</br></br>With the producer-price index to be announced this morning and the more important consumer price number due Wednesday, investors were taking few chances. Despite a late-day rebound, Dow Jones Industrial Average finished down 69.02, or 0.65%, at 10621.27. Other indexes also fell. The industrials now are 4.37% below the year's high, but still up 15.68% for 1999.</br></br>The day's big news was that Japan's economy returned to growth in the January-to-March quarter. Instead of welcoming the sign of world recovery, investors worried it will stoke inflation. That reinforced the view the Fed will boost benchmark interest rates June 30.</br></br>The expected rate boost, together with the launch of new corporate-bond issues, pulled money out of Treasury bonds. The bellwether 30-year Treasury bond declined 15/32, or $4.688 for each $1,000 in face value, pushing the yield up to 6.059%, its highest level since April 1998. The dollar was mixed.</br></br>"All eyes are on Friday morning right now," said Brian Conroy, head of listed trading at J.P. Morgan. He attributed the late rebound to short sellers, investors who bet on stock declines, who bought stocks to close out their bets before the inflation news hits.