Interest Rate Threat Keeps Indexes Down

The continuing threat of higher interest rates demolished a rally on Wall Street Monday, sending stocks lower even after a new report suggested the economy might not be overheating after all.

The Dow Jones industrial average closed 9.19 lower after rising as much as 136 points earlier in the session.

Stocks initially rebounded from last week’s steep losses after the National Association of Purchasing Management said the U.S. manufacturing sector grew in July for the sixth consecutive month but not as strongly as most analysts expected.

The market had anticipated that the report, which gauges manufacturing activity, would show continued economic expansion and raise the likelihood of the Federal Reserve hiking interest rates later this year.