STOCKS and interest rates fell sharplyyesterday as more bad news chipped away at investors' view of the economy.

The Dow Jones industrial average fell 265 points, and all the major indexes fell more than 2 percent and are now showing losses for the year. The Dow has now fallen four days out of five, and it has lost almost 320 points in just the past two days. Meanwhile, the yield on the Treasury's 10-year note fell to its lowest level since March 2009 as investors avoided stocks and sought the safety of government securities.

Only 442 stocks rose on the New York Stock Exchange, while 2,627 fell, a sign that investors expect all businesses to suffer if the economy continues to weaken.

Investors' gloom deepened a day after the Federal Reserve said it would begin buying government bonds as a way to stimulate the economy. News of slower industrial growth in China and a disappointing economic indicator in Japan helped send stocks plunging first in Asia, then in Europe.

The economic news in the U.S. was also troubling. The Commerce Department said the trade deficit widened in June to its highest level in 20 months as exports dipped. Falling exports mean U.S. manufacturing could be slowing down. And early this year, manufacturing showed the most consistent signs of recovery.

Investors got more bad news after trading ended. Cisco Systems Inc.'s revenue in the company's latest quarter fell short of analysts' expectations. Companies' revenue shortfalls have sent stocks falling over the past month, and Cisco's stock slid 8 percent in after-hours trading. Other stocks fell as well, and the report was likely to touch off more selling across the market on Thursday.

Stock traders tend to buy and sell based on their expectations for what business will be like in six to nine months. The problem is that economic data has been so muddled lately that investors have no sense of whether the recovery will hold. In its economic assessment statement on Tuesday, the Fed was still talking about a recovery, although the central bank said it would more modest than forecast in June.

"Uncertainty, uncertainty" target="_blank" title="n.不可靠；不确定的事">uncertainty, uncertainty" target="_blank" title="n.不可靠；不确定的事">uncertainty," was the way that Javier Perez-Santalla, managing director for futures and foreign exchange at the institutional brokerage firm Dinosaur Group, described the mood in the market.

"Everyone is scratching their heads, saying 'which way?'" Perez-Santalla said. "We're kind of stuck in this no man's land, where we're damned if we do, damned if we don't."

The Fed said Tuesday it will start buying government bonds with money it gets from the maturing mortgage-backed bonds that it bought during the recession. The goal is to try to cut interest rates on mortgages and corporate loans and in turn increase lending and help the economy grow faster.

But the Fed's moves were expected to be quite small in comparison to what the economy needs. And many investors were selling because the debt purchases would have only a limitedimpact on the economy.

The Dow dropped 265.42, or 2.5 percent, to 10,378.83, its largest slide since it fell 268.22 on June 29.

The Standard & Poor's 500 index fell 31.59, or 2.8 percent, to 1,089.47. The S&P 500 slipped below 1,100, a key psychological level. Falling and holding below that level could lead to more selling as computer-driven trading sets in.

The Nasdaq composite index fell 68.54, or 3 percent, to 2,208.63. The Nasdaq tends to have the biggest losses when stocks are falling sharply because many of its component companies are smaller businesses that struggle the most in a weak economy.

The Dow is now down 0.5 percent for 2010, while the S&P 500 is down 2.3 percent and the Nasdaq is down 2.7 percent.

Consolidated volume was fairly light on the NYSE at 4.6 billion shares, up from Tuesday's 4 billion. Trading has been particularly slow, even by summer standards as uncertainty" target="_blank" title="n.不可靠；不确定的事">uncertainty about the economy led many investors to exit the market completely. Low volume also can exaggerate swings in the market.

The Chicago Board Options Exchange's Volatility Index rose 3.02, or 13.5 percent, to 25.39. The VIX is known as the market's fear gauge because a rise signals traders are expecting more drops in stocks. It is still well below the record of 89.5 it reached during the height of the financialcrisis in 2008.

The yield on the 10-year Treasury note, which moves opposite its price, fell as low as 2.68 percent before edging up to 2.69 percent late yesterday. That was down sharply from late Tuesday's 2.77 percent. Interest rates are often set based on the yield of 10-year Treasurys.

The 10-year yield is at levels not touched since late March 2009 just weeks after recession worries sent the stock market to a 12-year low. Investors were willing to take a lower return from Treasurys in exchange for the safety of government debt.

Ryan Detrick, seniortechnical strategist at Schaeffer's Investment Research in Cincinnati, described the bond market as "saying major problems are still out there."

Britain's FTSE 100 fell 2.4 percent, Germany's DAX index dropped 2.1 percent, and France's CAC-40 fell 2.7 percent. Japan's Nikkei stock average dropped 2.7 percent.

Although recent earnings report were overall strong, the market has been rattled when companies' revenue has fallen short of expectations. Their concern is that companies are selling less because consumers aren't buying.

Cisco's revenue was slightly off of forecasts, but that was enough to send the company's stock down US$1.90, or 8 percent, to US$21.83 in after-hours trading. During regular trading, it was down 58 cents.

Stocks will struggle to rally further until some of the uncertainty" target="_blank" title="n.不可靠；不确定的事">uncertainty is removed about the strength of the economy and how government policy could affect companies, said Duncan Richardson, chief equityinvestment officer of Eaton Vance.

"What's lacking is confidence and no one can have confidence in an uncertain world," Richardson said. There has been a "huge reluctance to reinvest in businesses because of uncertainty" target="_blank" title="n.不可靠；不确定的事">uncertainty."

Companies are hesitant to hire new workers, buy new equipment or acquire new businesses to grow operations until there is more confidence, he said.

• sharply [´ʃɑ:pli] ad.锋利地；剧烈地 (初中英语单词)
• yesterday [´jestədi] n.&ad.昨天；前不久 (初中英语单词)
• economy [i´kɔnəmi] n.经济；机制；组织 (初中英语单词)
• industrial [in´dʌstriəl] a.工业的，产业的 (初中英语单词)
• meanwhile [´mi:n´wail] n.&ad.其间；同时 (初中英语单词)
• federal [´fedərəl] a.联邦的，联邦制的 (初中英语单词)
• commerce [´kɔmə:s] n.商业；社交；交流 (初中英语单词)
• lately [´leitli] ad.近来，不久前 (初中英语单词)
• modest [´mɔdist] a.谦虚的；朴素的 (初中英语单词)
• director [di´rektə] n.指导者；....长；导演 (初中英语单词)
• comparison [kəm´pærisən] n.比较；对照；比喻 (初中英语单词)
• volume [´vɔlju:m, ´vɑljəm] n.卷；书籍；体积；容量 (初中英语单词)
• height [hait] n.高度；顶点；卓越 (初中英语单词)
• financial [fi´nænʃəl] a.金融的，财政的 (初中英语单词)
• willing [´wiliŋ] a.情愿的，乐意的 (初中英语单词)
• investment [in´vestmənt] n.投资；(时间等)投入 (初中英语单词)
• research [ri´sə:tʃ] n.&vi.调查；探究；研究 (初中英语单词)
• slightly [´slaitli] ad.轻微地；细长的 (初中英语单词)
• affect [ə´fekt] vt.影响；感动；假装 (初中英语单词)
• uncertain [ʌn´sə:tn] a.不定的；不可靠的 (初中英语单词)
• equipment [i´kwipmənt] n.装备，设备 (初中英语单词)
• acquire [ə´kwaiə] vt.求得，获得，学得 (初中英语单词)
• weaken [´wi:kən] v.(使)弱化；衰弱；稀薄 (高中英语单词)
• stimulate [´stimjuleit] v.刺激；服兴奋剂 (高中英语单词)
• recovery [ri´kʌvəri] n.重获；获得；恢复 (高中英语单词)
• revenue [´revinju:] n.税收；收入 (高中英语单词)
• saying [´seiŋ, ´sei-iŋ] n.言语；言论；格言 (高中英语单词)
• damned [dæmd] a.该死的 ad.非常，极 (高中英语单词)
• limited [´limitid] a.有限(制)的 (高中英语单词)
• component [kəm´pəunənt] a.组成的；成分 (高中英语单词)
• billion [´biljən] num.万亿 (高中英语单词)
• exaggerate [ig´zædʒəreit] v.夸张，言过其实 (高中英语单词)
• crisis [´kraisis] n.转折点；危机 (高中英语单词)
• senior [´si:niə] a.年长的 n.前辈 (高中英语单词)
• technical [´teknikəl] a.技术的；专门性的 (高中英语单词)
• cincinnati [,sisin´næti] n.辛辛那提 (高中英语单词)
• consistent [kən´sistənt] a.一致的；始终如一的 (英语四级单词)
• uncertainty [ʌn´sə:tənti] n.不可靠；不确定的事 (英语四级单词)
• psychological [,saikə´lɔdʒikəl] a.心理学(上)的 (英语四级单词)
• chicago [ʃi´kɑ:gəu] n.芝加哥 (英语四级单词)
• policy [´pɔlisi] n.政策；权谋；保险单 (英语四级单词)
• deficit [´defisit] n.缺乏，赤字，亏空 (英语六级单词)
• forecast [´fɔ:kɑ:st] vt.&n.预测；预报 (英语六级单词)
• impact [´impækt] n.影响，作用；冲击 (英语六级单词)
• holding [´həuldiŋ] n.保持，固定，存储 (英语六级单词)
• earnings [´ə:niŋz] n.收益；报酬；获得 (英语六级单词)
• equity [´ekwiti] n.公平；公正 (英语六级单词)
• lacking [´lækiŋ] a.缺少的，没有的 (英语六级单词)
• reluctance [ri´lʌktəns] n.不愿；勉强 (英语六级单词)