U.S. stocks sank sharply Monday amid concerns over inflation, as crude oil prices hovered above 72 dollars.

U.S. Federal Reserve (Fed) Chairman Ben Bernanke on Monday called recent increases in inflation unwelcome and pledged to be vigilant against the rising inflation.

Analysts said that it is a sign that the U.S. Fed will continue to increase the short-term interest rate in the policy-making meeting to be held at the end of this month.

The U.S. Fed has increased short-term interest rates for 16 times since June 2004 and raised the federal fund rate to 5 percent last month.

High energy prices aggravated concerns over inflation as world crude oil prices hovered above 72 dollars Monday. New York's main contract, light sweet crude for delivery in July, added 27 cents to close at 72.60 dollars a barrel.

At the closing bell, the Dow Jones Industrial Average dropped 199.15, or 1.77 percent, to 11,048.72. The Standard & Poor's 500 index fell 22.93, or 1.78 percent, to 1,265.29. The Nasdaq composite index plunged 49.79, or 2.24 percent, to 2,169.62.

Source: Xinhua