Stocks Mixed as Dollar Falls, Pound Soars

The Dow Jones industrial average struggled to another new high Tuesday, but most stock measures dipped as investors secured some profits from the market’s stunning rebound of recent weeks.

Bonds were little changed for a second day after the Treasury’s sale of $17 billion of three-year notes met with adequate demand from investors.

The dollar fell broadly while the pound soared after Britain raised interest rates and set a plan to make the nation’s central bank independent.

The Dow rose 10.83 points to 7,225.32, surpassing the previous day’s record of 7,214.49 and setting its 17th high for the year.

Broader indicators edged lower in heavy trading, with the technology-laden Nasdaq market snapping a six-session winning streak.

“The action . . . was indicative of the market’s split personality,” said Charlie Crane, market strategist at Key Asset Management.

Stocks surged Monday in a dramatic climax to the market’s lightning-quick rebound from its recent downturn. The Dow, which slid nearly 700 points in that sell-off, gained 143 points to finish above 7,200 for the first time.

Investors have been worried that the Federal Reserve Board, trying to protect against rapid inflation by slowing the pace of borrowing and spending, will raise interest rates too aggressively and hurt company profits.

But data released Tuesday show that the vigorous economic pace may be slowing. The Commerce Department reported that orders to U.S. factories slipped 1.6% in March, the largest drop in seven months.

In the bond market, the price of the benchmark 30-year bond fell slightly, pushing its yield to 6.89% from Monday’s 6.87%.

At the auction of three-year notes, the average yield was 6.438%. Today the government plans to sell $12 billion in 10-year notes.

On the New York Stock Exchange, the number of advancing issues was about even with decliners in trading of more than 600 million shares, the seventh-busiest day in NYSE history.

The Standard & Poor’s 500 list--up nearly 65 points, or 8.5%, over the previous six sessions--fell 2.48 points to 827.76, and the NYSE composite index fell 0.66 point to 430.77. Both measures closed at record highs in Monday’s rally.

The Nasdaq composite index, which rose nearly 11% in the previous six sessions, fell 10.94 points to 1,328.30.

Although the Russell 2,000 list of smaller companies fell 0.70 point to 361.73, some analysts said the best opportunities for growth might come from smaller companies that are far beneath their highs even after rallying in the last week.

Among Tuesday’s highlights:

* Prominent Dow gainers were cyclical issues, which are more dependent on the economic pace and hadn’t risen as sharply in the recent rally. DuPont rose 2 1/4 to 110 1/4, Alcoa rose 1 3/4 to 72 3/8, General Motors rose 1 to 58 5/8 and Union Carbide rose 1 to 49 3/4.

Philip Morris was the Dow’s weakest issue, falling 2 3/8 to 41 3/4. It surged Monday on news that a Florida jury had cleared RJR Nabisco of liability for the death of a lifelong smoker. RJR also retreated, falling 2 3/8 to 30 1/4.

* The bellwether technology issues that led the recent Nasdaq advance gave back a bit. Cisco Systems fell 1 1/8 to 57 3/4, and Intel fell 4 1/2 to 158 after reports of a possible flaw in its new Pentium II microprocessor. Microsoft fell 2 11/16 to 117 5/16.

America Online rose, then fell 2 1/8 to 49 3/8 after reporting a surprising $2.64-million profit in the latest quarter.

* Among small caps, Keane, a computer systems consultant, dropped 2 to 50 1/2 to lead the Russell index.

PairGain Technology climbed 2 3/16 to 23 1/16, after introducing a product for upgrading computer networks.

In currency trading, the dollar cost 125.40 Japanese yen, down from 126.53 on Monday.

The British pound jumped to $1.6330 in late trading from $1.6230 late Monday. Higher British interest rates make pound-based assets more attractive to investors.

Meanwhile, in London, the FTSE-100 index closed 63.7 points higher at a record 4,519.3.