NEW YORK -- U.S. stocks fell for a third day yesterday amid lingering concern that the Federal Reserve's policy-making committee will raise interest rates at next week's meeting to quell inflation.
"Everybody's still worried about the Tuesday meeting to see if they're going to jack up rates again," said Chris Willox, a trader at BT Brokerage. "I think people are going to lay low until then."
The Dow Jones industrial average fell 14.47, to 3,837.13, giving it a loss of 96.22 points, or 2.4 percent, for the week. Shares of J. P. Morgan & Co., Philip Morris Cos. and Minnesota Mining & Manufacturing Co. led the decline.
Concerns about a sixth rate increase this year were heightened Wednesday after Wayne Angell, chief economist at Bear, Stearns & Co. and a former Fed governor, said he expects the central bank to raise rates by 50 basis points at next week's Federal Open Market Committee meeting.
Economists at Goldman, Sachs & Co. said the Fed panel would vote to increase the Fed funds rate on overnight bank loans to 5.25 percent from 4.75 percent and the discount rate -- what the Fed charges member banks for loans -- to 4.5 percent from 4 percent.
Higher rates boost corporations' borrowing costs and threaten to slow the economy, hurting future profit growth. They also make fixed-income investments more attractive than stocks.
Stock prices closely tracked movements in the bond market. The yield on the government 30 1/4 -year Treasury bond fell to 7.76 percent in early trading before rising back to 7.78 percent, three basis points lower than Wednesday.
Among broader market indexes, the Standard & Poor's 500 index slipped 0.19, to 461.27, its fifth straight decline and its lowest close since 461.23 on Aug. 15. Declines in auto, telecommunications and tobacco shares offset gains in food, health-care and electric utilities.
Health care stocks gained after Senate Democratic Leader George Mitchell of Maine said he will decide by today whether to seek even modest health care reforms before Congress adjourns for the year in October. A delay would put off any regulation by Washington of health care companies.
Among the gainers, Abbott Laboratories rose $1.125, to $31.50; Warner-Lambert Co. rallied $1.375, to $81; Pfizer Inc. climbed 62.5 cents, to $65.625; and American Cyanamid Co. added 87.5 cents, to $99.375.
The Nasdaq composite index fell as much as 1.87 before regaining some ground to close down 0.27, at 760.44, taking its losses for the past five days to 2.3 percent. Shares of Intel Corp., Amgen Inc., MCI Communications Corp. and Microsoft Corp. led the decline.
Declining stocks outpaced advancers 11-to-10 on the New York Stock Exchange, where about 303 million shares traded hands. The three-month daily average volume is 269 million shares.