The stock market, worried that higher rates will hurt corporate profits, has been nervous ever since the April CPI report, released May 14, showed the highest increase in consumer prices in nine years. Days later the Fed announced it was leaning toward increasing interest rates if necessary to stifle inflation. A 309-point drop in the Dow last week reflected the market's expectation that rates will indeed rise. A strengthening bond market prodded stocks higher for much of Tuesday's session, until Treasury prices fell late in the day. Internet stocks are no longer riding high because there are so many more of them, Orr said.
Supply is now equal to demand.
If the CPI numbers are worse than expected, Riley warned the market might suffer a severe drop. Volume on the floor of the Big Board came to 693.11 million shares, up from 667.53 million in the previous session.