For the third day in a row, the stock market opened strong and then faded--a pattern that worries investors who've been counting on stocks to end the year with a major rally.
The Nasdaq Stock Market composite index and the Standard & Poor's 500 stock index managed to salvage small gains, but the Dow Jones industrial average fell for the second day in a row.
Again today, it was the economy, and particularly the bond market's reaction to the latest economic data, that pulled down stock prices.
Today's consumer price index report showed inflation was barely measurable in October, with prices up just 0.2 percent. Economists like to factor the volatile prices of food products and energy out of the CPI to come up with a "core" inflation rate, but doing that didn't change the picture a bit. Because energy prices came down during the month, "core" inflation was also just 0.2 percent.
With inflation so low, bond traders decided interest rates ought to come down. Rates on 10 year Treasury bonds dropped to 4.48 percent in today's trading.
Many Wall Streeters view the fall in long-term interest rates as a forecaster of a recession, because unusual things are happening in the bond market.
Ordinarily long-term bonds pay two or even three percentage points interest more than short term bonds, but now the difference is just .08 -- 4.48 percent on a 10-year investment versus 4.40 percent for two-year government bonds.
Long term rates are falling and short-term rates are rising. If those trends continue, two-year-bonds could soon be paying higher interest than 10-year government debt.
Economists and bond traders call that an "inverted yield curve" and they don't like it. Every time recently that long-term rates have fallen below short-term rates, the U.S. economy has gone into a recession.
Other economic data are not forecasting a recession, but the bond market trends are enough to heighten fear that the economy could slump next year.
Needless to say, that prospect is not good for the stock market, so after opening higher, stocks fell once traders saw what was happening in bonds.
The Dow Jones industrial average fell 12 points to 10,674.76.
The Nasdaq Stock Market composite index closed a point higher at 2,187.93. The Standard & Poor's 500 stock index gained 2 points to 1,231.21.