Blue-chip stocks fell today, extending Tuesday's 225-point plunge by the Dow Jones industrial average and pushing that measure to the lowest level in three months.
But strength among technology shares and smaller-company issues bolstered the broad market, with some measures wiping out the morning's losses.
At 3 p.m., the Dow Jones industrial average was down 39.26 at 10,559.21.
Broader stock indicators were turning upward. The Nasdaq composite index, dominated by technology issues and smaller companies, gained 23.08 to 2,844.18. The Standard & Poor's 500 index was up 0.72 at 1,312.74.
There were no major developments to steer the market following Tuesday's sell-off, which was spurred by worries about the weakening dollar, a growing U.S. trade deficit and company profit warnings.
A weaker dollar can be inflationary by making imports more expensive in this country. A sagging dollar also makes U.S. investments less appealing to foreign investors by making the payoff less valuable in other currencies.
Investors have been worried that the Federal Reserve will raise interest rates for a third time this year to fight inflation, a move that would raise borrowing costs and erode corporate profits. The Fed's policy-setting Open Market Committee meets in two weeks.
"Investors are running out of ideas that are working," said Joseph Williams, who helps manage $9 billion at Commerce Bank in Kansas City, Missouri. "And any time there is the least sense of something wrong, investors are selling with a vengeance. So many stocks are just getting crushed by the market."
Morgan Stanley Dean Witter & Co. fell 1 1/2 to 87 5/1 6. The company reported fiscal third-quarter earnings of $1.65 a share, about 10 cents short of the highest estimate.
3Com rose 2 3/8 to 29 1 1/1 6. The No. 2 maker of computer-networking equipment said fiscal first-quarter profit rose to 33 cents a share on strong sales of its Palm electronic organizers, beating a 24-cent average estimate of analysts polled by First Call.
Maxwell Technologies Inc. fell 7 7/1 6 to 12 1/8 after the maker of portable power systems and products used in satellites said increased spending will hurt operating income in the first half of fiscal 2000.
In other trading today, declining issues outnumbered advancers by a 5-to-3 margin on the New York Stock Exchange, but Nasdaq gainers held a slender lead. NYSE volume was modest at 364.64 million shares.
The Russell 2000 index of smaller companies was down 0.17 at 426.33.