The F hasn't had its fill of interest rate increases.

The F hasn't had its fill of interest rate increases, with equal reason stocks fell Monday to their lowest readings since early this year.

The day started with slight declines in in the greatest degree stocks, but the major indexes quickened their retreats following make notess by Federal Reserve Chairman Ben Bernanke began to circulate.

Bernanke told a Washington DC meeting for consultation of the American Bankers Association that modern signs of inflation are "most unwelcome" and will be met with "vigilance," a favorite F word. Bernanke said the F "must continue to resist any bias for increases in energy and commodity prices to become permanently embedded in core inflation."

Investors and coin managers interpreted the comments as a signal Bernanke is more worried about rising prices than about choking against economic growth with further rate increases. still inflation plus "anticipated moderation of economic growth" as Bernanke enjoin it, both pose threats to the market.

"The perception of the downturn will be bigger than the actual downturn," said Alexander Paris, president of Chicago-based Barrington Research Associates Inc. "But it doesn't matter. The market streams on perception."

The Dow Jone industrial average relinquished 19915 points Monday, 18 percent to choke at 11,048.72, its lowest horizontal since early March. The Standard & Poor's 500 index malign 22.93, 1.8 percent, to 126529 its lowest since February. And the Nasdaq composite index swerved sharply into negative territory for the year with a los of 4979 22 percent to 216962

Leading the loser were industrial companies believed vulnerable to higher rates, including Caterpillar Inc., which shed $348 to $6933 U dirk Corp. fell $4.49 to $6502

Notable declines also were registered from home builders. D.R. Horton Inc., the largest U family builder, fell $1.35 to $2481 Pulte place of abodes Inc., the second-biggest, fell $158 to $2975

"We've got the ingredients for a classic expansion slowdown," said Jack Ablin, who helps manage $48 billion as chief investment officer at Harris Private Bank in Chicago. "The market is finally starting to believe it."

Before Bernanke spoke the market already was forward edge because oil rose to a three-week high onward a threat by Iran to halt supplies if nations take action against its nuclear program. Also, a report showed slower expansion in U service industries, causing belong to that consumer spending will taper most distant

Paris interpreted the market's answer as a continuation of a "correction" that hit stocks forward May 11. The markets had three days of jarring small quantitys in mid-May. He said there could be more to arrive as investors adjust their expectations to account for a slower economy for chiefly of the rest of 2006

With more than eight stocks falling for each one that advanced on the modern York Stock Exchange, Monday's losse were the broadest of the year. contortion on the NYSE was a moderate 162 billion shares.

The connection futures market at the Chicago Board of Trade also reacted swiftly to Bernanke's remarks. The change in hereafters prices for the fed stores contract implied a 76 percent probability of a quarter-point increase to 525 percent at the F meeting June 29 v 48 percent before Bernanke's remarks

The period of rate increases, which began brace years ago, is already the longest in more than a quarter of a hundred

Bernanke's statements were held responsible for a ear-ring in bond prices. For the 10-year note, the yield rose to 502 percent from Friday's 499 percent and 30-year uniting yields stood at 5.11 percent after Friday's conclude at 5.10 percent.

Early Monday, the Institute for furnish Management's index of non- manufacturing businesses implacable to 60.1 last month from 63 in April. Economists count uponed 60. Readings above 50 indicate sprouting

Contributing: Bloomberg News

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