A LATE round of bargain-hunting saved the Dow Jones industrial average from another steep drop yesterday.

But most stock measures suffered sizable losses after another unexpectedly strong economic reading heightened worries about inflation and sent interest rates soaring in the bond market.

On Wall Street, the Dow fell 5.78 points to close at 6,442.49, having bounced back from an 88-point deficit in the last half hour.

The blue-chip barometer slid more than 95 points in the morning after a surprisingly robust report on the manufacturing sector.

Stocks had opened higher with bonds, but quickly pulled lower in a follow-through to Tuesday's year-ending sell-off which shaved 101 points off the Dow.

NYSE volume totalled 461.03 million shares, against 395.21 million in the previous session. The Nasdaq composite index fell 10.33 to 1,280.70.