The Dow Jones industrial average recovered much of the day's decline over the last hour, trimming its retreat to 18.88 points, closing at 6,877.68.
Decliners outnumbered advancers by an 8-to-5 margin on the New York Stock Exchange, with 956 up, 1,534 down and 845 unchanged. NYSE volume totaled 535.55 million shares vs. 467.27 million yesterday.
The Standard & Poor's 500-stock list fell 3.89 to 785.77, and the NYSE's composite index fell 1.81 to 413.59. The Nasdaq composite index fell 20.15 to 1,249.19, and the American Stock Exchange composite index fell 3.66 to 591.79.
The broad market finished with much steeper losses, however. Once again, the Nasdaq market suffered the worst damage as leading computer-industry names continued their slide.
Bonds had started the day higher, but turned lower after this morning's report on consumer prices revealed a slightly bigger-than-expected increase during February. Investors were hoping for a tamer reading that might keep the Fed from raising rates.
As bond prices fell, the yield on the 30-year Treasury bond -- a key determinant of corporate and consumer borrowing costs -- edged above 6.99 percent. Yesterday the widely-watched yield crossed 7 percent for the first time since September before pulling back to about 6.96 percent.
The Labor Department reported this morning that consumer prices rose a moderate 0.3 percent in February with little sign of inflation except for volatile items such as vegetables and natural gas. The increase was a notch higher than many economists anticipated. However, so-called core prices -- excluding fuel and energy -- rose a more modest 0.2 percent.
The data reinforced other recent signs that rapid inflation isn't a problem despite robust economic growth, strong consumer demand and tight labor markets.
Many analysts are expecting Federal Reserve officials to slow the pace of business by raising the central bank's key lending rates at their March 25 meeting. Fed Chairman Alan Greenspan has warned the central bank would move pre-emptively to avert any potential acceleration in inflation.