Stocks ended a fitful session mixed Friday, as the twin threats of a slowing economy and inflation sent the blue chips lower.
The Dow industrial average slid 36 points but recovered most of that loss, closing down 12.79 at 4,192.62.The Dow underperformed broader market indexes, which ended mixed. The NYSE's composite index fell 0.03 to 273.75.
But the Standard & Poor's 500-stock index rose 0.34 to 506.42, topping its record high of 506.08 set on Thursday.
The Nasdaq composite index climbed 1.09 to 814.89. The American Stock Exchange's market value index rose 0.48 to 469.35.
Declining issues edged out advancers by about 11 to 9 on the New York Stock Exchange. Big Board volume was heavy at 314.48 million shares as of 4 p.m., against 320.42 million Thursday.
Stocks started the day on the plus side, as long-term Treasury bonds rallied 1/2 point on a Labor Department report that the nation's unemployment rate edged up 0.1 percent to 5.5 percent in March. Payroll employment climbed by 203,000 jobs, markedly lower than the 345,000 gain in February and less than the 225,000 anticipated by economists.
Bond investors usually like weak economic news, because it generally means that inflation is waning.
But the data did nothing to strengthen the dollar, which hit a low against the yen and traded at depressed levels throughout the day. The dollar was trading at 83.99 yen late in the day, down nearly a yen.
The dollar's weakness helped reverse the gains in bonds and pressured the Dow lower.
Stocks also weakened as investors began to worry that the jobs data might be signalling that the economy is slowing down too much to sustain corporate earnings. And, they said, the stock market has run too far too fast, with the Dow posting 16 new highs since Feb. 15.
Although the employment report appeared to confirm earlier indications that the economy is growing moderately without inflation, "both the stock and bond markets appear to have discounted all of the news," said Hugh Johnson, market strategist at First Albany Corp. That "means there's just no room left on the upside."
The bond market eroded further, with the 30-year Treasury down 9/16 point late in the day, after San Francisco Federal Reserve president Robert Parry suggested that inflation may continue to trouble the economy.
Also pulling the market down were oil stocks, which fell after Salomon Brothers downgraded several issues. Salomon warned the price of oil could fall if the United Nations approves a pending proposal to allow Iraq to increase its oil sales.
Salomon downgraded Chevron, which fell 3/4 to 451/2; Texaco, which finished unchanged at 65; and Mobil, which fell 5/8 to 891/2.
Banking stocks were mixed after posting sharp gains on Thursday. Chase Manhattan rallied another 7/8 to 421/2, after rising sharply Thursday on news that investor Michael Price had taken a large stake in the company's stock.
Price is known for buying cheap stocks and goading management of those companies into making changes to enhance share value. But Chemical fell 3/8 to 405/8, and Citicorp eased 1/8 to 451/8.
The Dow average was led lower by DuPont, which fell 23/8 to 623/8 in leading volume on the Big Board. The stock retraced earlier gains posted after the company agreed to buy back Seagram Co.'s 24.2 percent DuPont stake in the chemical maker for $8.8 billion.
Seagram dropped 13/4 to 261/8, following reports that the company would use the DuPont proceeds to buy MCA from Japan's Matsushita Corp.