NEW YORK, MAY 24 -- The Dow Jones industrial average closed off a fraction of a point today as a drop in the bond market and profit-taking took the steam out of a week-long rally.

As the trading day wore on, traders' attention seemed focused on interest rates, which were pushed higher following the weak results of the $8.5 billion auction of five-year Treasury notes. The average yield on the notes was 8.54 percent, up from 8.53 in the last auction.

Meanwhile, high-technology stocks, the leaders in the recent runup, pulled back noticeably. With that loss of leadership, market strategists set their sights on a near-term correction that they said was much overdue.

"It's a real struggle between the bulls and the bears," said Hugh Johnson, chief investment officer at First Albany Corp.

Johnson said one reason the market has been able to absorb intraday profit-taking is because of support from mutual funds, where there is a lot of cash to be put to work.

Johnson said because of a recent surge in the purchase of shares by individual investors in stock funds, there is more cash held by those funds than levels just before the start of the bull market in 1982.

At the close, the Dow was down 0.71 at 2855.55. Volume was a moderate 155 million shares.

Among technology stocks, Digital Equipment led the losers, suffering its first losses since last week. The computer giant dropped 1 1/8 to 92 1/8 after an analyst meeting this afternoon. A source at Alex. Brown & Sons said analysts left the meeting with a negative impression of Digital. Alex. Brown, whose analyst attended the meeting, reiterated its sell recommendation for the company.

Other losers in high-tech included Compaq Computer, off 7/8 at 122, after declaring a 2 for 1 stock split. IBM closed flat at 118 3/4 after slipping a full point earlier in the day.

But there were bright spots on the technology front. Motorola surged 3 5/8 to 83 7/8 after Japan chose the company's speech coding technology as the standard for its emerging cellular telephone industry.

And on the over-the-counter market, both Novell and Lotus Development recorded large gains in the aftermath of their aborted mergers. Novell jumped 4 3/4 to 49. Lotus added 2 3/4 to 36 3/4.

Dell Computer closed up 1 7/8 at 12 in anticipation of continued strong earnings growth.

The broad market indexes closed mixed. The NYSE Composite was off 0.38 at 195.47, Value Line was up 01.36 at 284.90, Standard & Poor's 500 was off 0.88 at 358.41 and the Nasdaq was up 1.42 at 458.29.