NEW YORK, MAY 25 -- The Dow Jones industrial average declared an official end to its recent rally with a 34 point loss today amid a flurry of last-minute sell-programs.
The session was marked by heavy institutional selling of high-technology stocks, which had dazzled the market in its recent rally that pushed the Dow up nearly 200 points in a month.
The technology sell-off was triggered by a drop of more than 30 percent in the widely held over-the-counter stock of Adobe Systems Inc., a California computer software firm that pegged second-quarter earnings well below analysts' estimates. Other high-tech issues in turn tumbled like dominoes, giving up their leadership of the past two to three weeks.
The day's losses were also fueled by weaker U.S. bonds, which extended Thursday's declines on that session's sloppy five-year Treasury note auction that gave yields a boost. A report today of higher-than-expected gains in April personal income and spending put further pressure on yields.
''We think the market's at the top of a trading range,'' said David Rajala, vice president and director of equity management at One Federal Asset Management.
''We've realized most of our potential return, and we're not uncomfortable with taking profits.''
However, Thomas Brown, strategist at Rutherford, Brown and Catherwood, was bullish. ''The outlook is fairly good," he said. "You could get a mild rally next week in which one day could set a new high. The market used the Adobe Systems news as an excuse to pull back today. This was going to be an evening-out day anyway.''
At the close, the Dow was down 34.63 at 2820.92, trimming its gain for the week to 1.01 points. Preholiday trading was light, with 120 million shares changing hands. Declining issues outnumbered advancing ones by about a 7 to 4 ratio.
In the technology sector, Adobe Systems lost nearly a third of its value as investors sought to reduce their holdings and few buyers emerged for the software maker, which dominates the market for producing typefaces for desktop publishing.
IBM, one of this week's star performers, closed off 2 1/2 at 116 1/4, along with Compaq Computer, off 3 3/8 at 118 5/8. Motorola, another recent leader, tumbled 3 1/8 to 80 3/4.
On the over-the-counter market, Microsoft fell 2 1/4 to 74 1/4 and Apple shed 2 to close at 40.
Among other individual issues, Dennison Manufacturing Co. gained 8 3/8 points to 27 3/8 on news it is merging with Avery International Corp. in a stock-swap arrangement valued at $500 million.
Texas Utilities was the most actively traded New York Stock Exchange stock, closing at 37, up 1/8, on volume of 3.12 million shares. Global Marine Inc. of Houston was the second most active with 2.42 million shares traded as investors clamored after the company's public offering Thursday of 13.5 million shares. Philip Morris extended Thursday's losses that stemmed from news that the federal government will recommend placing curbs against the tobacco industry and that Harvard University and City University of New York are selling their tobacco stocks. Philip Morris closed at 42 1/2, off 1 5/8.
Among today's blue-chip gainers, Merck and Co. rose 1 1/2 to 84 and General Motors edged up 3/8 to 48 3/4.
The Dow transports closed off 6.75 at 1152.75, extending the week's losses that have been tied to fare wars between airlines. UAL lost another 1 3/8 to 150 1/4.
The broad indexes all lost ground. NYSE Composite was off 1.76 at 193.71, Value Line off 1.10 at 283.80, Standard & Poor's 500 off 3.83 at 354.58 and the Nasdaq off 4.60 at 453.69.