The Dow Jones industrial average failed to break the closely watched 4,000 mark Thursday, hampered by investor selling and concerns about the weak dollar and the Mexican financial crisis.
But the blue-chip average reached a new high for the second day in a row, closing at 3,987.52, up 1.35 points. The Dow extended Wednesday's 27.92-point rise to 3,986.16, which shattered a record high set about a year ago and gave some market participants hope of going to 4,000 soon.
The broader Standard & Poor's 500 index set a record for the third consecutive session, rising 0.68 point to 485.22.
But this week's lofty levels, and the strong performance of stocks in the last three months, led some investors to question how much further it could go. The Dow has gained 286 points since Dec. 1, and it has risen 48 points so far this week.
Stocks were responding to a drop in the dollar amid fears that Mexico's financial crisis will hurt the United States.
In the broader market, declining issues outnumbered advancers by about 3 to 2 on New York Stock Exchange volume of 362.24 million shares, down from 378.86 million traded Wednesday.
Among other broad market indexes, the NYSE's composite index rose 0.08 point to 263.27. But the Nasdaq composite fell 2.32 points to 793.31, and the American Stock Exchange's market value index declined 1.67 points to 447.68.
The U.S. currency plunged to its weakest level against the German mark in nearly four months and hit a 3 1/2-month low against the Japanese yen in a selloff blamed on investor uncertainty about the U.S. economy.
The dollar's drop was precipitated largely by the renewed erosion of the Mexican peso and fears that Mexico is headed for more financial turmoil, particularly with the fate of the crucial $50-billion, U.S.-led credit package in doubt. Mexico's Bolsa index finished 33.5 points higher at 1,831.50, after having fallen as low as 1,732.37 in morning trading.
At the close, the dollar was quoted in New York at 1.489 German marks and 97.45 Japanese yen, down from 1.509 marks and 98.53 yen on Wednesday.
Meanwhile, U.S. Treasury bond yields ended mixed in a market pulled in two directions by the dollar's plunge and economic reports suggesting a moderation in inflation.
At the close, the yield on the main 30-year bond had risen to 7.57%, up from 7.56% the day before. Its price, which moves in the opposite direction, declined 1/4 point, or $2.50 per $1,000 invested.
But other Treasury securities posted gains. Short-term maturities rose 1/8 point to 5/16 point, and intermediate maturities' gains ranged from 1/16 point to up 3/16 point, the Telerate Inc. financial information service reported.
Among Thursday's highlights:
* Telefonos de Mexico was the second-most heavily traded issue on the NYSE; it finished up 5/8 at 30 1/8 after dropping earlier in the session. Grupo Sidek slid 2 1/8 to 3 1/8 after the conglomerate said Wednesday it would default on some short-term loans.
* Leading the Dow 30 components higher was Eastman Kodak, up 1 3/8 at 51; Alcoa, up 1 1/4 at 83, and Coca-Cola, up 1 1/4 at 54.
* AT&T lost 1 to 51 3/8 after saying it was cutting rates for non-business long-distance customers while boosting business long-distance prices.
Fears of a long-distance price war sent Sprint down 7/8 to 29 7/8 and MCI Communications down 7/8 to 19 3/4.
* RJR Nabisco was the most active issue on the NYSE and fell 1/16 to 5 11/16. The food and tobacco conglomerate said it will pay its first common stock dividend since it was acquired in 1989 and proposed a reverse stock split.
* A good earnings report by Hewlett-Packard pushed computer stocks sharply higher. HP gained 10 1/2 to 115 7/8.
* Other computer stocks rose on Hewlett-Packard's announcement. Adobe Systems rose 2 to 34 1/2, Intel gained 1/8 to 79 7/8, Oracle added 3/8 to 46 1/8 and Apple Computer rose 5/8 to 43 3/16.
Other foreign markets closed lower. Tokyo's 225-share average ended down 210.41 points, or 1.17%, at 17,780.59. In Frankfurt, the 30-share DAX average fell 19.32 points to 2,115.72. London's Financial Times 100-share average closed off 23.8 points at 3,051.1.