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The Selloff Spreads

A wild final hour of trading left all major market indices down Thursday as selloff fever spread from the Nasdaq to other markets.

According to preliminary figures, the Dow Jones Industrial Average closed down 35.68 at 10, 983.04. Nasdaq finished at 4,459.25, down 185.42 points on the day. The Standard & Poor's index ended down 15.09 points at 1493.43.

In the last hour, the Dow moved from positive territory to a 100 point loss, then climbed back up to the break-even point, then slipped back down.

During the same final hour, the Nasdaq was down more than 260 points on the day—six percent of its value—before recovering.

It was the fourth down day in a row the Nasdaq fell. It lost 4 percent of its value Wednesday.

The reason for the Nasdaq selloff, according to CBS MarketWatch,was a widespread concern that stocks are overvalued, leading investors to sell their shares to take in profits before stock values drop.

The Dow remained in positive territory thanks to interest in retail and consumer stocks as well as a huge jump in shares of Philip Morris.

The Nasdaq is down about 12.2 percent from its record intra-day high of 5,132 set on March 10.

"The hot momentum at the beginning of the year has shifted to negative momentum, and as a result players are squeezing through some closing doors trying to get out," said Robert Dickey, chief technical strategist at Dain Rauscher Wessels.

"Investors are trying to guess where the bottoms are on these previously hot issues but as long as they sell off hard and close low in their ranges there will likely be more selling to follow," Dickey said.

Some investors sought refuge in bonds, where yields reached their lowest levels in a week.

The benchmark 10-year Treasury note rose 11/32 to yield 6.11 percent, while the 30-year-bond yield, meanwhile, eased to 5.92 percent. As demand for bonds increases, prices rise and yields fall.

The background to Thursday's market movement was a Labor Department report that said fourth quarter 1999 gross domestic product—the broadest measure of growth—rose 7.3 percent, topping Wall Street expectations for 7 percent growth after a previous calculation put fourth quarter growth at 6.9 percent.

GDP is the total output of all goods and services produced by labor and property in the United States.

The quarter's clip is the fastest since the first quarter of 1984, when the domestic economy charged ahead by 9 percent.

Strong growth could fuel inflation fears, and spark another rise in interest rates.

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