NEW YORK, JUNE 29 -- The Dow Jones industrial average gained nearly 2 points today for its third consecutive advance as the bond market rallied and mutual fund managers put the finishing touches on their second-quarter portfolios.

The 30-year Treasury bond moved from a 6/32 loss as stocks opened to a 14/32 gain by midmorning, but although bonds firmed, the dollar slumped on talk of higher interest rates abroad and speculation on prospects for a Federal Reserve decision to ease U.S. rates at its policy meetings Monday and Tuesday.

Domestic money managers dutifully spent the day rounding out their second-quarter portfolios, block traders said.

''It was essentially a continuation of Thursday -- foods, drugs and technology issues were still getting bought for {inclusion in portfolios at} the end of the quarter,'' said chief trader George Pirrone at Dreyfus Corp.

Head trader Dan Murphy at C.J. Lawrence said the market experienced ''typical, end-of-quarter group rotation.'' He stressed that, other than for such portfolio adjustments, there was no impetus to trade near term.

''You've got a very slow week coming up,'' he said, referring to the July 4 holiday. ''Nobody wants to be in the position of having to trade one way or another in an illiquid market'' -- particularly a week before second-quarter earnings reports begin to flow in quantity.

At the close, the Dow stood at 2880.69, up 1.98, while advances outpaced declines on the Big Board by almost a 2 to 1 ratio on lightly moderate volume of 145 million shares.

The Dow has risen 38 points in its three-session advance since Tuesday's closing low, and has recovered slightly more than 40 percent of its losses since the June 15 record high of 2935. Many traders considered this a healthy performance, despite dull trading today and the expected dearth of activity next week.

Dow component stocks spent an inauspicious day, except for Procter & Gamble, which followed through on its Thursday leadership with a 1 3/8 gain to 87 1/8. AT&T eased 1/4 to 38 1/2 on 1.6 million shares on the New York Stock Exchange, but volume was nowhere near Wednesday's levels, when AT&T shocked the market with lower earnings projections.

Although American Express traded actively at 1.8 million shares, the stock finished unchanged at 30 3/4, ex-dividend, on volume distorted by dividend-capturing strategies.

Economy-lodgings outfit Motel 6 posted most-active volume of 2.6 million NYSE shares, finishing down 1 3/8 at 16 3/8 after a massive block of stock changed hands.

The Dow transports finished unchanged at 1142.70, while the utilities continued their volatile pattern of trading amid crosscurrents of interest-rate speculation, rising a hefty 1.38 to 210.01.

Among broad stock indexes, the Standard & Poor's 500 was up 0.39 at 358.02, the NYSE Composite up 0.30 at 195.48, the Value Line up 1.54 at 286.63, the Amex Market Value up 2.64 at 361.21, and the Nasdaq Composite up 1.91 at 462.29.