WASHINGTON -- Pessimism over interest rates and the Federal Reserve's apparent inability to rein in the strong economy deepened yesterday, pushing the yield on the Treasury's long bond close to 8%.

The latest catalyst for the spreading gloom in the bond market, which spilled over into stocks, was the Commerce Department's report that factory orders in August surged 4.4%. The increase was the biggest since December 1992, and came on gains in most of the industries surveyed.

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