Bear Scare

Rising global interest rates spook Wall Street and squeeze the U.S. economy

Only a few weeks ago, economists and investors were confident, almost cocky, about the prospects for the U.S. stock market. Since inflation seemed moderate, forecasters widely assumed that interest rates would glide gently downward and bolster Wall Street. But now that assumption seems exquisitely ill timed. Interest rates around the world have suddenly surged, sending stock prices tumbling on exchanges from Tokyo to London and threatening to put the sickly U.S. economy into the intensive-care ward.

An uncertain and often bearish mood took over most of the world's stock markets last week. In a fit of gloom on Monday, Wall Street...

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