The Dow Jones industrial average tried another casual jog above 8,000 on Wednesday, but tripped again as persistent earnings worries overshadowed another improvement in interest rates.
For the fourth time in five sessions, the Dow turned lower almost as soon as it bobbed above 8,000, surrendering an early 65 point gain and falling 63.35 to close at 7,906.71.
Broader stock indicators also gave back some sizable gains despite a drop in interest rates in the bond market, which resumed a rally after a one-day stumble.
The downturn derailed an eight-session streak of record highs by the Russell 2000 index of smaller companies and a four-session streak by the Nasdaq composite index.
Although no major companies issued warnings Wednesday of disappointing profits, investors remain too jittery about third-quarter reports -- not due for several weeks -- to bid the blue-chip sector back to record levels, analysts said.
"The bond market has rallied, but the second part of the equation is corporate profits. And when there's a little fear that they will fall shy (of Wall Street forecasts), it's a little tough to mount anything sustainable," said Tony Dwyer, chief market strategist at Ladenburg Thalmann & Co., calling the concerns overblown. "Fear is often worse than reality, and I think that will be the case here."
Brokerages and investment banking firms gained as Travelers' agreement to buy Salomon highlighted the acquisition wave sweeping Wall Street. U.S. and foreign banks have been scrambling to buy brokerages this year as walls come down between the banking and brokerage industries. Salomon jumped 4 3/4 to 76 1/4 . Travelers Group sank 2 5/8 to 69- 7/1 6.
Donaldson, Lufkin & Jenrette rose 2 1/8 to 66- 1/1 6; A.G. Edwards & Sons Inc. gained 2- 7/1 6 to 48 7/8 ; Bear Stearns Cos. rose 7/1 6 to 43- 3/1 6; Lehman Brothers Holdings Inc. gained 3/4 to 49 3/8 ; Merrill Lynch & Co. jumped 7/8 to 71- 7/1 6, and PaineWebber Inc. rose 1- 3/1 6 to 43-1 3/1 6.
Bankers Trust New York Corp., a commercial bank that rose 11 percent last week on speculation that Travelers was considering a bid for it, fell 1 7/8 to 122- 5/1 6.
The Dow's other big Dow decliners included Merck, IBM and Procter & Gamble, investor favorites that in recent days had hinted at a full recovery from August's jitters. Merck fell 2 5/8 to 101 1/4 , IBM fell 1-1 1/1 6 to 101- 9/1 6, and P&G fell 1- 9/1 6 to 68-1 5/1 6.
Declining issues outnumbered advancers by a slim margin on the New York Stock Exchange, where volume totaled a hefty 645.84 million shares, up from 526.72 million on Tuesday.
The Standard & Poor's 500-stock index nearly edged into record territory with an early 8-point gain, but fell 7.45 to 944.48 on the day. The NYSE composite index flirted with Monday's record high of 499.16, but fell 2.68 to 494.27.
The Nasdaq composite index crossed 1,700 for the first time, but fell 9.95 to 1,687.41 as several big-name technology shares turned lower: Intel fell 3 1/2 to 95 5/8 , Microsoft fell 3- 1/1 6 to 132- 7/1 6, and Dell Computer fell 2 1/2 to 97 7/8 .
The Russell 2000, which had also closed at record highs 17 times in the prior 19 sessions, fell 0.84 to 448.58.
The American Stock Exchange composite index held onto a small gain, rising 0.62 to 686.07.
Avis Rent A Car was the most active NYSE issue, jumping to 22 1/2 in its first day of trading after an initial public offering at $17 a share.
On the bond market, the benchmark 30-year Treasury bond rose 1 5/1 6 point, or $9.38 for each $1,000 in face value. Its yield, which moves in the opposite direction from the price, fell to 6.31 percent from 6.38 percent late Tuesday, dropping to the lowest level since July 31.
In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 7/3 2 point to 121 1 3/3 2. The average yield to maturity fell to 5.45 from 5.46 percent.