Your Money : FINANCIAL MARKETS : Dow Loses 33 on ‘Miserable Day’

Stocks suffered a third straight losing session Tuesday as the dollar’s precipitous drop raised concerns that the Federal Reserve Board will have to raise interest rates to resolve the currency crisis.

The Dow Jones industrial average and broader market indicators finished substantially lower, though they were above their worst readings of the day. The blue chip indicator was off 33.93 at 3,707.97.

At one point in Tuesday’s trading, the Dow fell more than 50 points, tripping “circuit breakers” on the New York Stock Exchange that restrict certain types of computer-guided trading.

“It was a miserable day,” said Edward Nicoski, chief market strategist for investment firm Piper Jaffray Inc. in Minneapolis. “The internals of the market were absolutely horrible,” he said, noting that losing NYSE issues outnumbered gainers by a margin of more than 3 to 1.

Market measures that comprise a wide range of stocks also dropped sharply. The NYSE composite index fell 2.30 to 249.10, and Standard & Poor’s 500-stock index fell 4.14 to 451.34. The Nasdaq composite index of mostly smaller stocks skidded 10.06 to 708.79.

Selling grew intense shortly after midday as the dollar sank against the Japanese yen to a depth not seen in the post-World War II era.

A depressed dollar is considered inflationary because it can cause American consumers to pay higher prices for imports. It also erodes the value of dollar-denominated assets, possibly lessening demand among foreign investors for U.S. stocks and bonds, Nicoski said.

The dollar slipped for the first time ever below the 100-yen mark, hitting 99.90 briefly in New York, before recovering later in the day. It closed at 100.35 yen in New York, down from 101.90 on Monday.

The dollar also took a major hit against the German mark, ending at 1.594 marks, down from 1.600 and the lowest level since May, 1993.

The U.S. currency has come under relentless selling pressure due to a variety of factors, including persistent trade tensions with Japan and expectations of higher investment returns in other foreign currencies.

The dollar’s collapse unsettled investors who believe the Fed may raise interest rates to boost the U.S. currency, analysts said.

Higher rates could attract foreign investment money back to the dollar, though they also raise the risk of slowing the economy and biting into corporate profits.

The central bank has raised rates four times this year in an effort to dampen inflationary pressures.

The falling dollar and fear of another increase in rates sent the Treasury’s 30-year bond yield higher for a third straight day. The long bond’s yield rose to 7.49% from 7.46% on Monday. The last time the yield hit that level was May 13. Its price, which moves in the opposite direction, dropped 3/8 point, or $3.75 per $1,000 in face value.

“Now we’re back into the soup again that we were in back in February and March, when people were worrying about the Fed raising rates,” said Marshall Acuff, portfolio strategist at Smith Barney Shearson.

Weakness in technology stocks added to the gloomy atmosphere on Wall Street, where investors were preoccupied with speculation about whether the Fed will try to counteract the dollar’s decline.

A dramatic worsening in the country’s trade deficit added to the anxiety about the dollar. The Commerce Department said the shortfall in the balance of trade in goods and services soared to $8.40 billion in April from $6.87 billion in March.

Among Tuesday’s market highlights:

* Lotus tumbled 14 3/8 to 37 and headed Nasdaq’s list of active issues. The software company surprised Wall Street late Monday by disclosing that second-quarter sales and earnings won’t reach expectations because of product shipment delays and disappointing sales of desktop software.

* Other software stocks were dragged down by the news. Microsoft dropped 7/8 to 52 5/8, Broderbund fell 1 3/4 to 41 and Novell lost 1/2 to 14 9/16.

* Apple Computer slipped 1 1/8 to 26 and Intel was off 7/8 at 58.

* Quaker Oats plunged 8 1/4 to 73 5/8 after Nestle’s chairman and chief executive said the company is not interested in acquiring the company.

* Caterpillar, a component of the Dow industrials, fell 4 1/4 to 102 1/8 as a strike began after negotiations between labor and management broke down.

* U.S. Healthcare retreated 2 5/8 to 40 1/2 after the company said it is not for sale. The stock rose 2 1/8 on Monday on market talk that it was a takeover target.

Selling in stock markets overseas set a negative tone for U.S. trading. In Tokyo, the 225-issue Nikkei average fell 338.87 points, or 1.60%, closing at 20,813.16. Stocks closed lower in London, where the Financial Times 100-share average fell 30.9 points to 2,940.2. Shares also closed lower in Paris. Mexico’s Bolsa index fell 25.92 points, or 1.14%, to 2,257.69.

In Germany, stocks managed a modest recovery, with the DAX average closing up 14.45 points at 1,983.27.

Market Roundup, D8