Stocks continued their slide as investors remained unsettled by growing expectations that the Federal Reserve will raise interest rates at least once more this year. Battered Internet stocks broke out of a slump to help slow the stock market's retreat.

The Dow Jones industrial average fell 52.55 points to close at 10,655.15. The blue-chip index had been down as much as 158 points earlier in the session.

Broader stock indicators also fell, although they mirrored the Dow and crept back from steep early losses. The Standard & Poor's 500 fell 16.37, to 1281.43, and the Nasdaq composite index fell 28.87, to 2490.11.

The S&P 500 closed 9.7 percent below its record high, set July 16, dipping as low as the 10 percent decline that Wall Street considers a market correction. The Nasdaq is 13 percent below its peak, also reached July 16.

The Dow has held up slightly better as investors gravitate toward large, well-established names. It is 4.9 percent below its record high.

Stocks have been driven lower as the market absorbs the possibility of higher interest rates. Hoping to keep inflation from creeping into the booming U.S. economy, the Fed is widely expected to raise short-term interest rates when its policy-making Federal Open Market Committee meets Aug. 24.

By this afternoon, however, fears were quelled by a spike in Internet stocks. Yahoo rose 6-5/16, to 127 1/2, and Amazon.com rose 5 1/2, to 91. EBay, battered last week when the computer system that runs its online auction failed, rose 9 5/8, to 89 1/4.

The threat of Fed action has pushed long-term interest rates to the highest levels in almost two years. Today, the 30-year Treasury bond yielded 6.24 percent, a level last seen in November 1997, up from 6.23 percent late Monday, as the price of the benchmark bond fell $1.88 per $1,000 invested. The high yields on bonds are presenting an attractive, less volatile alternative to stocks.

Financial services stocks, which are highly sensitive to interest-rate fluctuations, were mostly lower.