Dow plunges 140 points on interest rate fears

In an unwelcome Easter gift for investors, the Dow Jones Industrial Average abruptly plunged in afternoon trading yesterday on fears that this week's quarter-point rise in US interest rates might only be the start of a trend, writes David Usborne in New York.

By the close, the Dow was off an ominous 140.11 points at 6,740.59. The sudden loss - at its worst yesterday, the average was down no less than 214 points - will leave traders and investors anxious about the direction the market will take on Monday after the three-day Easter break.

Analysts said the sell-off had been prompted by concern over a continuing rise in interest rates in the credit markets and worries that stocks may soon lose out in competition with bonds. At the close, the yield on the benchmark 30-year US Treasury bond had climbed to 7.08 per cent.

Some traders cautioned against pessimism, however. Many suggested that as the market began suddenly to drop many of those who might have stepped in to buy and reverse the slide had already taken their eyes off the market and left for home and the Easter break.