The Dow Jones industrial average fell 74.43 to 5,485.98, following a very sharp fall in the final 45 minutes of trading.

Decliners led advancers by 1,598 to 851 on the New York Stock Exchange. Volume hit 473.75 million shares vs. 421.19 million in the previous session.

The broad-market indexes also were lower. The NYSE composite fell 4.20 to 340.93. The S&P 500 list was off 8.69 at 633.50, and the Nasdaq composite index dropped 1.55 to 1,107.60. The Amex market value index fell 2.75 to 569.96.

The swiftness of the late sell-off left market participants reeling. "The phone rang, the Dow was down 25," Larry Wachtel said. "I got off the phone five minutes later, and the Dow was down 80.

"The background is simply the price rises that we've been seeing in oil, grain, the CRB index hit an eight-year high, grain priceds are at a four-year high."

The inflation jitters were particularly prominent ahead of tomorrow's scheduled release of the March producer price index and Friday's release of the consumer price index for March.

The long-bond lost more than a point, yielding 6.90 percent, as investors became concerned about a rise in commodities prices.

Bond investors often respond to higher inflation by selling their holdings, because inflation eats into the long-term value of fixed-income securities.