Stocks Sink on Inflation Jitters; Dow Sheds Nearly 100 Points

U.S. stocks dropped Monday amid persistent worries about rising interest rates and slower economic growth after the latest warnings on inflation from Federal Reserve officials.

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The Dow Jones industrial average closed down 99.34 points, or 0.91 percent, at 10,792.58. The Standard & Poor's 500 Index was down 15.90 points, or 1.27 percent, at 1,236.40. The Nasdaq Composite Index was down 43.74 points, or 2.05 percent, at 2,091.32.

Investors were also cautious about taking new positions before key inflation data due this week.

The Nasdaq suffered its seventh straight day of losses, as Qualcomm Inc. (QCOM) shares fell 5.2 percent after the company filed a patent infringement complaint against mobile phone maker Nokia.

Shares of Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) also slid as crude oil futures fell more than $1 a barrel amid expectations that a major tropical storm in the eastern Gulf of Mexico would not affect U.S. oil and gas rigs.

"The market never really got strong in the beginning of the day and it slowly deteriorated," said Jay Finkel, senior equity trader at Lord Abbett. "The market, going into these inflation numbers hasn't been pretty. Obviously they are very, very closely watched numbers this month, and we've been told by Fed officials that they are going to be closely watched."

Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, said a sustained rise in core consumer prices would exceed her comfort level.

Federal Reserve Board Governor Susan Schmidt Bies said the Fed is very data-dependent now, and that the economy is at a turning point which makes it difficult to know when the Fed will stop raising interest rates after two years of increases.

That brought extra focus to inflation numbers due this week which will be some of the last inflation data the Fed gets before its June 28-29 policy meeting. The U.S. Labor Department will release its Producer Price Index for May on Tuesday, followed by the Consumer Price Index on Wednesday.

The Dow fell to its lowest close since February and the S&P saw its lowest close since October as investors fretted that rate increases worldwide by central banks seeking to curtail inflation would slow growth.

Qualcomm accused Nokia of violating six patents, sending its shares down $2.25 to $41.19.

Monster Worldwide Inc. (MNST), parent of job Web site, fell after it joined other companies which have disclosed new inquiries into the granting of stock options to top executives. Goldman Sachs and Robert W. Baird analysts cut their investment ratings on the stock, which fell 8.1 percent to $38.60.

ConocoPhillips shares were down 1.6 percent to $59.63 on the NYSE while Exxon shares slipped 0.9 percent to $58.27. Crude oil futures settled down $1.27, or 1.8 percent, at $70.36 a barrel.

General Motors Corp. shares advanced 1.7 percent to $25.78, helping to limit losses on the Dow. Bankrupt auto parts maker Delphi Corp. announced a deal with the United Auto Workers union late on Friday seen as a step toward avoiding a strike which would cripple output at GM, Delphi's biggest customer.

Fed Chairman Ben Bernanke was due to address banking students at 7:30 p.m. Monday.

Trading was active on the New York Stock Exchange where about 1.62 billion shares were traded, in line with the 1.61 billion daily average for last year.

On Nasdaq, about 1.9 billion shares changed hands, above the 1.8 billion daily average last year. Declining shares beat advancing shares by almost 4 to 1 on both the Nasdaq and New York Stock Exchange.

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