Wall Street stocks dropped sharply in the final hour of trading yesterday after bond yields shot higher amid worries over inflation. The Dow Jones industrial average ended 101.27 points lower to close at 7,960.84. Broad-market indexes were lower along with the Dow.

Bonds yields rose after a private report suggested retail sales were strong in August. The report raised worries that important government reports due today and tomorrow could show that inflation is rearing its head.

Bond and stock investors do not like inflation scares because they suggest that the Federal Reserve might find it necessary to raise short-term interest rates, which would attack the long-term value of both stocks and bonds.

The government is due to release July producer prices and retail sales figures today and July consumer prices tomorrow. If the numbers show too much growth in the economy they are likely to pull bond prices lower and stocks with them.