FINANCIAL MARKETS : Dow Clipped 10.38; Bond Yields Fall

U.S. blue chip stocks eased Monday as investors took profits after Friday’s run into record territory. Meanwhile, bond yields fell for the fourth consecutive day on optimism about economic reports due out this week.

Elsewhere, the dollar edged lower again in light trading, boosting gold prices as investors wondered whether the currency was poised for a fresh plunge.

The Dow industrials finished at 4,025.23, off 10.38 points. But gainers and losers ended in a virtual dead heat on the Big Board, with the closing count showing 1,133 stocks up and 1,126 down.

Broader market indexes finished mostly higher. The NYSE composite gained 0.34 point to 265.17 and the Nasdaq composite edged up 0.09 point to 802.31.

Trading volume eased, however, with 275 million shares changing hands on the Big Board, down from Friday’s heavy 383 million.

Traders said the sluggish movement in market indexes and the slowdown in trading volume suggested that many investors decided to take a break after Friday’s powerful buying wave, which carried the Dow to a record close.

But in the bond market, the bullishness that greeted Friday’s February U.S. employment report--which showed healthy job creation but flat wage growth--continued to push yields lower.

In light trading, the yield on 30-year Treasury bonds dipped to 7.45% Monday from 7.46% Friday.

Yields on shorter-term bonds fell more significantly. The yield on the 2-year T-note slumped to 6.75% from 6.82% Friday.

Traders said the continuing downward pressure on yields indicated that investors see nothing on the horizon to change their collective view that the U.S. economy is slowing to a more moderate growth rate. That should allow interest rates to stabilize or trend lower.

Indeed, the New York Times reported Monday that four of the Federal Reserve Board’s seven governors believe the U.S. economy’s pace is winding down.

Important data on the economy is due this week. Today’s scheduled reports include February retail sales and an Atlanta region Fed survey. On Wednesday the government will report on February wholesale inflation, industrial production and capacity utilization.

If stocks and bonds are confident about a “soft landing” for the economy, however, the dollar continues to be pressured by its own set of problems--including expectations of more attractive interest rates elsewhere.

John Shaughnessy, director of research at Advest Inc., said the strength in the stock market Friday reflected hopes that the dollar was poised for a rebound.

But after gaining on Friday after a free fall earlier in the week, the dollar eased again on Monday. It dropped in New York to 90.73 Japanese yen, down from 91.09 on Friday, and to 1.407 German marks, down from 1.416.

That helped send more traders scurrying into gold and silver, looking for safe haven. Near-term gold futures rose $3.20 to $385 an ounce on the Comex; silver jumped 12.8 cents to $4.70.

Among Wednesday’s market highlights:

* Bankers Trust New York plunged 9 7/8 to 51 1/2 in heavy trading after saying late Friday that it expects to report an after-tax loss of up to $125 million in the first quarter, related partly to trading in Latin American securities.

Other bank and brokerage stocks were dragged lower on fears of widespread write-offs from Latin trading or foreign-currency trading. J.P. Morgan sank 2 1/4 to 61, Morgan Stanley fell 1 to 66 1/2, Citicorp was off 3/8 to 41 1/2, First Interstate lost 1 1/2 to 78 1/4, Chase Manhattan dropped 3/4 to 35 and BankAmerica eased 1/8 to 47 1/4.

* On the plus side, many tech stocks rallied anew. Intel gained 7/8 to 81 3/8, Micron Technology rose 1 7/8 to 69, Texas Instruments shot up 2 1/2 to 89 3/8 and IBM added 7/8 to 82.

But Apple dropped 1 3/8 to 38 1/8. The company slashed prices by up to 20% on its Macintosh Performa 630 and Quadra 630 computers.

* Another big loser was Future Healthcare, which sank 10 13/16 to 4 9/16 after the company disclosed that it found 1994 accounting discrepancies that may have a material impact on results.

Mixed action overseas didn’t offer much to inspire Wall Street. In Tokyo, the 225-share Nikkei index ended up 119.26 points at 16,477.64. London’s FTSE-100 index fell 9.3 points to 3,011.8, and Frankfurt’s DAX index added 5.47 points to 1,999.49.

Latin markets also were mixed. Mexico’s Bolsa index eased 3.98 points to 1,586.02, but Argentina’s Merval index continued to rebound, surging 8.2% to 324.48.

Market Roundup, D6

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Interest Rates:

30-year T-Bond: 7.45%

1-year T-Bill: 6.42%