Stocks rose broadly but marginally Wednesday as a follow-through rally from Tuesday's big gains faded.
Meanwhile, many foreign markets also rose, although Southeast Asian stocks again were mixed amid continuing concern over the region's deepening woes.
On Wall Street the Dow industrials, which soared 257.36 points on Tuesday as many money managers returned from summer vacations, added just 14.86 points Wednesday to 7,894.64.
The Dow had traded as high as 7,944 earlier in the day, but dropped back near the close as bond yields rose.
Broader market indexes also finished just slightly higher. The Standard & Poor's 500 was up 0.28 point to 927.86; the Russell 2,000 index of smaller stocks added 0.74 point to a record 428.79.
Still, winners topped losers by 17 to 11 on the New York Stock Exchange. And trading volume was up sharply, to 554 million shares--highest since mid-August.
The bond market turned troubled again on Wednesday as fresh data pointed to more strength in the economy. Particularly disturbing to bond traders was General Motors' report of robust car and truck sales in August.
"It's more evidence the third quarter is looking stronger than some people thought," said Scott Graham, bond trader at Prudential Securities. That's bad for bonds because excessive strength could compel the Federal Reserve to raise interest rates soon.
Even so, the bond market has just been churning in recent weeks, with the yield on the bellwether 30-year Treasury bond--which rose to 6.6% Wednesday from 6.55% Tuesday--bouncing between 6.5% and 6.7% since Aug. 7.
Stocks had other problems Wednesday besides bonds. Some key technology shares weakened on earnings concerns.
Gateway 2000, the personal computer company, sank $3.75 to $32.81 after warning of weaker-than-expected third-quarter results. And Seagate Technology, a major producer of computer disk drives, dropped $2.50 to $36.38 after the company pulled out of an investors' conference--sparking worries that it has only bad news to report in the near-term.
Also, Hutchinson Technology, a maker of disk-drive parts, fell $3.63 to $30 after it warned that lower demand for its products will crimp earnings this quarter.
Still, analysts noted that third-quarter corporate earnings overall are expected to be strong, reflecting the healthy U.S. economy.
In foreign trading Wednesday most markets continued to rebound with U.S. shares. Hong Kong's key index soared 978.66 points, or 7.1%, to 14,713.99, after plummeting in recent sessions with the rest of Southeast Asian markets. Beaten-down Indonesian shares also attracted buyers, with the key index up 7%. And the Philippines' key index gained 2.2%.
But Malaysia's government may be losing a battle of wits with investors: The government's attempts to get local pensions funds to prop up the plunging stock market failed for a third day, with the benchmark stock index tumbling more than 5%.
Among U.S. market highlights:
* Tech shares were mixed despite Gateway's announcement. Intel fell $1.25 to $93.81, Compaq lost $1.69 to $66.81 and Motorola fell $1.38 to $75.25, but Dell Computer gained $2.88 to $87 and Iomega rocketed $2.13 to $27.75.
Also Zytec shot up $7.44 to $36.44 after Computer Products agreed to buy Zytec for about $500 million.
* In the retail sector, Michaels Stores surged $2.38 to $27.50 after reporting strong August sales.
* Some battered blue chips retreated again, including Coca-Cola, down 88 cents to $59; Gillette, down 88 cents to $85.06; and Eli Lilly, down $3.19 to $105.50.
In the municipal bond market, California sold $3 billion in nine-month tax-anticipation notes, which are used to bridge the gap between state expenditures and tax receipts. The notes were an unusual competitive offering for the state, which normally holds its giant note sale in negotiated sales with dealers.
The tax-free notes, which carry an interest coupon of 4.5%, were priced to yield 3.83% to 3.85% to investors.
Market Roundup, D8