Wall Street traders were increasingly worried that the Fed would raise interest rates at its May 15 meeting because of inflation risks, following a report in the Wall Street Journal that summarised several Fed officials' hawkish comments in the past weeks.

On the bond market, the average yield on bellwether 30-year treasury bonds was 6.056 per cent compared to 5.944 per cent Friday. At one point during the trading day the Dow was down as much as 220 points before rebounding somewhat in the final hour.

Volume was 690 million shares, with 323 gainers, 2,860 losers and 303 unchanged. Other exchanges were also off. The electronic Nasdaq exchange lost 48.65 points or 2.60 per cent to close at 1,820.31 while the Standard and Poor's 500 shed 21,36 points or 1.93 per centto close at 1,086.54.