Downey, First Sentinel and Dime Slide on Inflation, Rate Worries
Dow Jones Newswires</br></br>NEW YORK -- Small-capitalization stocks underperformed the overall market, and interest-rate-sensitive stocks led the way down.</br></br>Savings-and-loan stocks fell after fears of inflation and higher interest rates were fanned by news that consumer prices rose sharply in March. On the Big Board, Downey Financial fell $1.47, or 2.9%, to $48.85 a share. First Sentinel Bancorp slid 53 cents, or 2.6%, to 19.76, and Dime Community Bancshares sank 44 cents, or 2.3%, to 18.90.</br></br>The report of a jump in consumer prices, which came a day after strong retail-sales data, provides evidence of a strengthening economy. Some investors are concerned that a rise in inflation could force the Federal Reserve to raise interest rates this year, which could hurt stocks. "Looking ahead, investors will be watching for changes in the yield curve and interest rates very closely for signs that the long bull run in small caps may be starting to wane," said Michael Sheldon, chief market strategist at Spencer Clarke.</br></br>The Russell 2000 Index of small stocks fell 3.81 points, or 0.65%, to 582.02, and the Standard & Poor's SmallCap 600 Index slipped 2.05, or 0.72%, to 283.71. The Nasdaq Composite Index of large- capitalization and small-cap stocks sank 5.23, or 0.26%, to 2024.85.