Fear Grips Traders; Dow Tumbles 29.28 : Stocks: The market reacts to concerns about inflation and interest rates as its key index drops 99.10 points in a week.

Stock prices fell for the fourth straight session today, still in the grip of interest rate and inflation worries.

The Dow Jones average of 30 industrials dropped 29.28 to 2,666.67, extending its loss since last Tuesday to 99.10 points.

Declining issues outnumbered advances by nearly 4 to 1 on the New York Stock Exchange, with 330 up, 1,223 down and 420 unchanged.

Big Board volume totaled 136.15 million shares, down from 174.26 million in the previous session.

The NYSE’s composite index dropped 2.13 to 181.93.

Analysts said fears of rising interest rates kept a dominant hold on the mood among investors.

A sharp rise in rates last week raised yields on long-term government bonds close to 9%, their highest levels since last May.

As a new week began, predictions abounded of further increases in rates, partly on the basis of signs that business activity had picked up recently.

Higher interest rates are seen as an increasingly significant obstacle to hopes that corporate earnings might improve as the year progresses.

Bond prices marked time in early trading today as investors, pummeled by bad news last week, kept a low profile in advance of two economic reports this week.

The Treasury’s benchmark 30-year bond was unchanged, as was its yield, which stood at 8.94%.

The market was “trying to collect a breather here from the hectic pace,” said Kevin Flanagan, a money market economist with Dean Witter Reynolds Inc., referring to the market’s losing streak last week.

The 30-year bond plunged nearly $37 per $1,000 over the five days in response to signs of increasing inflation and a stronger economy--two negatives for bond traders because they could prompt the Federal Reserve to keep interest rates high.

Bond prices fall when interest rates go up, so investors tend to sell if they believe the Fed may tighten credit.

Flanagan said the market was waiting to see what clues the next economic reports might hold about the Fed’s plans. Durable goods orders for March are scheduled to be released on Tuesday, and the first report on the gross national product for 1990 is to be announced Friday.

Flanagan said the durable goods report is expected to be negative for bonds.

In the secondary market for Treasury bonds, prices of short-term and intermediate governments were unchanged and long-term issues were unchanged to 1/32 point lower, according to the Telerate Inc. service.

The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.

The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on outstanding Treasury issues with maturities of a year or longer, was off 0.26 at 1,134.20.

Yields on three-month Treasury bills rose to 7.97% as the discount picked up 3 basis points to 7.72%. Yields on six-month bills advanced to 8.27% as the discount rose 5 basis points to 7.85%. Yields on one-year bills rose to 8.45% as the discount gained 3 basis points to 7.86%.