Blue-chip stocks overcame a round of profit taking in a see-saw Wednesday session to close at a second record high this week.
The Dow Jones industrial average soared 47 points in early trading, then fell back on profit-taking. It ended the day with a gain of 8.99 points at 4,160.80, beating the record of 4,157.34 reached Monday. It was the ninth record closing high for the blue-chip average since March 10.
Broad market indexes ended mixed after reversals in some technology stocks that had performed well over the last several sessions.
The profit-taking most affected the Nasdaq composite index, which was hurt by a selloff in technology stocks. The Nasdaq ended 6.98 points lower at 819.16, after closing at a record high of 826.14 on Tuesday.
The NYSE's composite index fell 0.08 points to 271.84 and the Standard & Poor's 500-stock index fell 0.78 point to 503.12. The American Stock Exchange's market value index rose 0.83 point to 462.35.
Analysts attributed the selling to investors being nervous that Wall Street's record-setting rally might be nearing a peak. They noted that technology shares have been a market leader.
"A lot of the stocks that have done well recently are giving some of it back," said John McElroy, principal at 1838 Investment Advisors.
"They've had such a move it's been overdone on the upside," said Tony Dwyer, chief market strategist at Josephthal, Lyon and Ross.
Stocks rallied initially after the government reported that sales of new housing in February slid 14% to the lowest level since April, 1992.
The data was seen as further evidence of a slowing economy, which could dissuade the Federal Reserve from boosting interest rates again soon.
The Fed has raised interest rates seven times since February, 1994, citing a need to dampen inflation.
Meanwhile, long-term Treasury bond yields fell a little after see-sawing sharply on Wednesday.
Bond yields initially fell on the housing report, but yields reversed course by mid-afternoon amid tepid demand at the Treasury's monthly auction of five-year notes--one of several auctions this week arousing anxiety about the market's ability to absorb fresh supply.
Yields on the five-year Treasury notes fell to their lowest level in seven months.
The high yield was 6.99%, down from 7.13% at the last auction on Feb. 23. A total of $11 billion in notes were sold out of bids totaling $23.9 billion.
Despite the setback, analysts detected optimism in a market that has rallied sharply the last three months, driving down bond yields to levels not seen in nine months.
By day's end, the benchmark 30-year bond yield settled at 7.37%, down from 7.39% Tuesday. Its price, which moves in the opposite direction, was up 5/32 point, or $1.56 per $1,000 in face value. Prices and yields move in opposite directions.
Analysts have suspected that much of the stock market's recent rally has been fueled by "window dressing" on the part of money managers anxious to show that they were fully invested during the strong first quarter.
They reckoned that the selling on Wednesday could be a sign that investors were worried that the rally will evaporate when the first quarter ends on Friday.
Advancing issues squeaked past declining ones by 1,078 to 1,070 on the New York Stock Exchange, with a hefty 385.95 million shares changing hands, up from Tuesday's volume of 320.36 million shares.
Among Wednesday's highlights:
Computer stocks were notably weaker as investors took profits. IBM fell 1 5/8 to 82 7/8; Micron Technology fell 6 1/4 to 78 1/2; Texas Instruments declined 3 3/8 to 94 1/4. Intel slid 1 7/6 to 87 1/6; Applied Materials lost 2 1/4 to 57; Alliance Semiconductor declined 2 7/8 to 43 3/4; Microsoft slipped 1 3/8 to 72 1/4; and Adobe Systems skidded 2 to 48 1/4. Cisco Systems fell 1 7/8 to 37 1/4.
* Clark Equipment soared 28 1/8 to 81 1/4 on speculation that Ingersoll-Rand Co. would sweeten its takeover price after Clark turned down a buyout offer of $75 to $77 a share. Ingersoll ended unchanged at 32 1/8.
* Talk of the takeover bid lit a fire under other construction-related stocks and cyclical issues in general. Caterpillar rose 2 to 53 7/8. Automobile stocks finished higher, with Chrysler rising 1 3/4 to 40 3/4, General Motors up 1 3/8 to 44 1/2 and Ford Motors rising 5/8 to 26 5/8.
* Eaton Corp. rose 2 5/8 to 53 1/2; Cummins Engine jumped 1 1/8 to 44 1/4.
* ShopKo Stores gained 7/8 to 10 after it reported higher-than-expected earnings.
Overseas stocks were mixed. In Tokyo, the 225-share Nikkei average fell 221.00 points to 16,460.73. In Frankfurt, the 30-share DAX average was up 7.92 points at 1,918.88. London's Financial Times 100-share average closed 14.0 points higher at 3,142.3.
Mexico City's Bolsa index 21.76 points to 1,810.90.
Elsewhere, the dollar sank Wednesday against major currencies in U.S. trading amid diminishing expectations that Germany's central bank would lower interest rates during its policy-making meeting on Thursday.
The drop followed a selloff of dollars in the United States on Tuesday and in overnight trading overseas after the Federal Reserve said it would leave short-term U.S. interest rates unchanged.
Higher rates would have made dollar-denominated holdings more attractive.
At the close in New York, the dollar was quoted at 88.39 Japanese yen, down from 88.90 yen on Tuesday. It recovered after falling to as low as 88.03 yen in late London trading, just above the day's low of 88.01.
The dollar also was changing hands in New York at the rate of 1.383 German marks, down from 1.388.
The U.S. currency was weighed down against both the mark and yen as dealers abandoned hopes that the Bundesbank would lower interest rates Thursday.