NEW YORK, SEPT. 3 -- The stock market lost ground for the third straight session today in a jumpy session marked by wide swings.

The Dow Jones average of 30 industrials rose more than 20 points in the early going, but closed with a 2.55 loss at 2599.49.

That marked the first time the average closed below 2,600 since Aug. 7. The Dow set a record closing high of 2722.42 on Aug. 25.

Volume on the New York Stock Exchange came to 165.20 million shares, down from 199.94 million in the previous session.

Analysts said the tone for the session was set largely by the credit markets, where interest rates bounced around erratically.

Interest rates on long-term Treasury bonds, which hit their highest levels since January 1986 in Wednesday's session, dropped back a bit in early activity. But then the credit markets came under renewed pressure. Late in the session, government bond rates were moderately higher on the day.

While traders remain worried about weakness in the dollar and the rise of interest rates, there is also a school of thought that the recent slide in stock prices has been a healthy development.

That "correction," as some describe it, is said to be wringing excessive enthusiasm out of the market, bringing stocks back to levels where investors might find them more attractive for the long term.

The question being debated by many analysts is how far down the market must go to reach that point.

The Dow's showing today would have been considerably worse had it not been for Merck, which climbed 7 3/4 to 217 1/2. The stock has been propelled to new highs this week by the news of the Food and Drug Administration's approval of a new Merck anticholesterol drug.

Auto stocks were mixed as the domestic makers reported lower car sales for the late-August selling period. Ford Motor dropped 1 1/2 to 103 7/8; General Motors was unchanged at 88 and Chrysler rose 1/8 to 44.

Standard & Poor's index of 400 industrials gave up 1.73 to 374.60, and S&P's 500-stock composite index was down 1.47 at 320.21.

The Nasdaq composite index for the over-the-counter market dropped 0.57 to 448.36.