Blue-chip stocks fell again, extending Tuesday's 225-point plunge by the Dow Jones industrial average and pushing the index to its lowest level in three months.
But strength among technology shares and smaller-company issues bolstered the broad market, with the Nasdaq composite index rising back toward record territory.
The Dow fell 74.40, to 10,524.07, about 800 points below its record-high close of 11,326.04, set Aug. 25. Yet, even with the slide from record levels, the barometer of 30 major companies holds a gain of 14.6 percent for the year.
Broad market indicators were mostly negative, but the strength in technology stocks helped lift the Standard & Poor's 500-stock index by 2.93, to 1310.51. The Nasdaq composite rose 37.06, to 2858.16, about 30 points shy of a new high.
The Russell 2000 index of smaller companies rose 1.03, to 427.53.
Leading the Dow's retreat were Union Carbide, down 2-5/16 at 54 7/8; United Technologies, down 2 1/4 at 58 5/8; Procter & Gamble, down 2 1/4 at 98; IBM, down 1-15/16 at 125-3/16; and Goodyear, down 1 7/8 at 45-7/16.
3Com rose 1-5/16, to 28 5/8, as the most active Nasdaq issue after the maker of computer network products and Palm organizers topped Wall Street forecasts with late Tuesday's profit report.
Among other leading Nasdaq technology names, Microsoft rose 1-7/16, to 96-1/16; Yahoo rose 9-15/16, to 179 1/2, and eBay rose 8 1/2, to 149 1/8. MindSpring Enterprises jumped nearly 25 percent, rising 6 1/2, to 32 7/8, after the Internet service provider announced an alliance with Ceridian, a business services technology company.
There was little reaction to a Federal Reserve report saying "moderate-to-brisk rates of growth" in the economy are contributing to widespread labor shortages, a major force behind inflation.
Still, the Fed said in one of its periodic surveys on regional business conditions, consumer prices have remained stable.
Fed policymakers will use the report when they meet Oct. 5 to review the central bank's stance on interest rates. Investors have been worried that the Fed will raise interest rates for a third time this year to fight inflation, a move that would raise borrowing costs and erode corporate profits.
More worrisome today was another weak day for the dollar on foreign exchange markets. The dollar fell for a third straight session against the Japanese yen, spiraling back toward last week's 3 1/2-year low. In late New York trading, a dollar bought 104.32 yen, down from 104.85 late Tuesday.
A weak dollar can cause inflation by making imports more expensive in this country.