While Internet stocks soared on the promise of a strong Christmas, the broader market slumped yesterday due to a more immediate event - a possible interest rate increase next week.

At the close of trading on Wall Street, the Dow Jones industrial average was down 125.70 at 10,991.38, a drop of 1.1 per cent.

Broader stock indicators also ended lower, although the technology-dominated Nasdaq composite index contained its losses as Dell and many Internet issues rose sharply.

The Standard and Poor's 500 fell 11.31 to 1,332.85, and the Nasdaq composite index fell 13.49 to 2,657.73.

Declining issues outnumbered advancers by a three-to-two margin on the New York Stock Exchange, with 1,801 down, 1,196 up and 539 unchanged.

NYSE volume totalled 676.73 million shares at the close against 689.89 million in the previous session.