DOW GIVES BACK MORE; INDEX DOWN 235 POINTS AS LONG-TERM INTEREST RISE ALARMS INVESTORS.

Byline: Robert D. Hershey Jr. The New York Times

Stock prices resumed their losing ways Thursday as rising long-term interest rates prompted many investors to cash in profits on the approach of a long holiday weekend.

It was the fifth decline in the last six sessions, and except for the Nasdaq market, where losses were relatively modest, the drop more than wiped out the lone recent advance on Wednesday.

The Dow Jones industrial average, the hardest-hit gauge, plunged 235.23 points, or 2.2 percent, to 10,466.93, its biggest skid of the year in terms of points and the third time this week that its loss surpassed 100 points. Over the latest six sessions, the blue-chip index has lost 420 points, or 3.9 percent.

``Stocks seem to be the tail tied to the interest-rate kite,'' said Timothy E. O'Grady, senior portfolio manager at the First Capital Group in Philadelphia. Yields jumped by nearly 0.1 percent on two-year notes.

Two government reports, as well as desultory bidding at the Treasury's note auction on Wednesday, may have contributed to the further unease over rates and caused investors to focus again on the Federal Reserve's stated inclination to increase rates if the economy shows no signs of slowing.

One report disclosed revised figures on first-quarter economic output showing that personal consumption grew at a 6.8 percent annual pace, even faster than first estimated. The other, suggesting a continued taut labor market, recorded no rise last week in first-time claims for jobless benefits.

``Rising long-term bond yields create valuation issues,'' said Richard B. Hoey, director of equity research at the Dreyfus Corp., referring to the appeal of stocks relative to fixed-income securities.

The Dow's decline was not much greater than that of the Standard & Poor's 500-stock index, which fell 23.35 points, or 1.8 percent, to 1,281.41. The latter, however, had 85 rising components, paced by Intel, while only Johnson & Johnson among the Dow's 30 stocks managed an advance.

The Nasdaq composite index, which is laden with high-technology stocks, fell 8.03 points, or three-tenths of a percent, to 2,419.15.

Analysts were at a loss to explain why most of the technology sector resisted the decline other than it has already been badly battered, especially Internet issues. The index is down 8.8 percent from its record on April 26 and was down 10.2 percent on Tuesday, enough to technically qualify as a correction.

``People have raised a lot of cash,'' said Matthew W. Johnson, head of Nasdaq trading at Lehman Brothers. But he said whether they were putting this money aside to buy new issues ``or taking money off the table, is not clear.''

Volume was moderate again Thursday, with 830 million shares changing hands on the New York Stock Exchange and 834 million on Nasdaq.

Despite the fact that the market was concerned with economic growth, cyclical stocks were the main casualties among the Dow components.

Morgan Stanley's cyclical index slumped 2.5 percent, its biggest loss of the year.

``The market is again concerned about the Fed tightening,'' said John Kattar, director of U.S. equities at Boston Company Asset Management.

Some drug stocks bucked the downtrend, with Pfizer gaining 2.875, to 103.875, after naming a new president and chief operating officer, and Lilly, recommended by Credit Lyonnais, gaining 2, to 69.

IBM, which soared Wednesday, fell 2.125, to 116, after a 2-for-1 split took effect, while Merrill Lynch added 4 5/16, to 83, continuing its run-up on rumors it will be acquired by Chase Manhattan. Chase fell 2.625, to 72.75.

Texaco, whose merger talks with Chevron seem to have stalled, fell 2.375, to 62.777.

In technology, computer and Internet stocks were mostly lower while chip makers were mixed. Star Media Network, which went public on Wednesday at 15, surged 19 7/16, to 45.5, while DLJ Direct jumped 8, to 38, in its second day of trading.

Ebay lost 5 5/16, to 169; Amazon.com declined 6.375, to 114 9/16; and Yahoo! fell 7.5, to 133.375.

Declining issues outnumbered advancing ones on the New York Stock Exchange by nearly two to one, with 39 making new 52-week lows and 25 new highs.

The Wilshire 5000, the most inclusive gauge of domestic stocks, declined by 1.4 percent.

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Photo, Chart

PHOTO A trader checks the price of stocks Thursday on the floor of the New York Stock Exchange.

David Karp/Associated Press

CHART: Tracking the Dow