Tumbling bond prices and a weak outlook for Raytheon deflated stocks today as traders, already anxious about interest rates, found themselves nervous about corporate earnings as well.

The Dow Jones industrial average fell 231.12 to close at 10,417.06. It was the Dow's 10th-biggest point drop in history and its steepest since May 27, when the blue-chip index fell 235.23 points.

Broader indicators were also lower. The Standard & Poor's 500-stock index fell 22.17, to 1313.04, and the Nasdaq composite index fell 43.52, to 2872.43, retreating from the record close of 2915.95 set Monday.

A drop in bond prices depressed stocks today. Bond investors, nagged by persistent worries about interest rates, sold ahead of this week's government reports on wholesale prices and industrial production. The reports are expected to bring the latest signs of whether inflation is escalating.

A hint of inflation could lead the Federal Reserve to raise interest rates for the third time this year.

The drop in bond prices pushed the yield on the 30-year Treasury bond up to 6.22 percent today, from 6.19 percent late Friday, as its price fell $5.00 per $1,000 in face value. The bond market was closed Monday in observance of Columbus Day.

Financial services stocks, which are most vulnerable to rising rates, were among the Dow's worst performers today. American Express fell 3 5/8,to 145 1/4.

Last week, traders were able to set aside some of their interest-rate worries amid expectations that strong third-quarter earnings reports, which began in earnest today, would bolster stock prices. But that optimism vanished today amid news of trouble at Raytheon.

Defense contractors fell after reports that Raytheon is behind schedule or over budget on some major Pentagon orders. While market officials delayed the start of trading for Raytheon shares, most of its rival contractors tumbled.

In the final hour of trading, Raytheon confirmed that its earnings for fiscal 1999 and 2000 will come in sharply below analysts' expectations. Once the stock opened, Class B shares plummeted 18 3/4, to 24 1/4. General Dynamics fell 4-11/16, to 57-11/16, and Litton fell 3-9/16, to 49-5/16.

Stocks were also held down by the dollar's weakness against the Japanese yen. In late New York trading, the dollar bought 106.11 yen, down from 106.89 yen late Monday.