MARKETS LOSE STEAM AFTER HOLIDAY WEEKEND.

Byline: Bruce Meyerson Associated Press 

Stocks slid sharply Tuesday as interest rates rose on some strong economic readings that renewed inflation worries and provided an excuse to take profits.

The Dow Jones industrial average fell 53.19 to close at 5,709.67 after briefly dipping below 5,700. The barometer of 30 big U.S. companies, which celebrated its 100th anniversary over the weekend, continued to stumble after setting two new records last week.

Broader market measures also succumbed to profit-taking as trading turned lifeless after the long holiday weekend. With many traders taking the entire week off and weekend media reports focusing on the market's pricey condition, there was little impetus for new buying, analysts said.

Declining issues outnumbered advancing ones by nearly 2 to 1 on the New York Stock Exchange, where volume totaled just 338.25 million shares, well below Friday's pace.

``It's an extremely overextended market. You can't maintain that pace without running out of gas,'' said Larry Wachtel, market analyst at Prudential Securities. ``And when you have a holiday like this, many players are gone and the vacuum is filled with sellers.''

The NYSE's composite index fell 3.22 to 360.52 and the Standard & Poor's 500-stock index fell 6.28 to 672.23. Both indexes, which are dominated by larger companies, had closed at record highs Friday.

The slide extended to the more speculative sector of the market, where a powerful rally that started in early April has met with increasing skepticism. The Nasdaq composite index fell 11.50 to 1,236.30 and the American Stock Exchange's market value index fell 3.18 to 610.77.

``These stocks are running up on a buying panic and emotion that defies technical or fundamental reasoning,'' said Bob Dickey, technical analyst at Dain Bosworth in Minneapolis. ``When some of these hot stocks reverse, they will drop faster than they rallied.''

Bonds started the day higher, but slid after the National Association of Realtors reported that sales of existing homes rose 0.5 percent to 4.22 million in April, the third consecutive advance.

The mood worsened in the afternoon when Johnson Redbook reported an increase in retail sales for the first three weeks of May compared with April.

Stocks followed bonds lower as the yield on 30-year Treasuries - a benchmark that affects borrowing costs for consumers and corporations - rose above 6.85 percent.

Since early March, the financial markets have been struggling to interpret a series of mixed signals on the economy's underlying health.

Indications of rising payrolls and wages had prompted worries that heavy consumer spending would cause quicker inflation, forcing the Federal Reserve to raise interest rates to slow economic activity. But some mild readings on inflation have helped offset some of the concerns.

Tobacco stocks fell after the Supreme Court turned down an industry appeal to withhold computer data from Minnesota officials suing to recover state Medicaid costs for treating sick smokers. Philip Morris, down 3-1/2 to 100, led the Dow's slide, which was also highlighted by profit-taking in consumer-product makers such as Coca-Cola, down 1-1/2 to 46, and Procter & Gamble, down 1-1/8 to 89-1/4.

``These multinational consumer companies had been very strong until the last few days. The valuations on those are really excessive,'' said Larry Rice, chief investment officer at Josephthal, Lyon & Ross. Analysts also noted that a rising dollar could cut into the value of overseas revenues.