Markets

The dollar dropped sharply after Treasury Secretary Baker said it might have to come down to help reduce the U.S. trade deficit. Currency traders feared that using the dollar as a tool in international politics might unleash forces that could not be controlled. Against the mark, the dollar hit its lowest level since 1981, slipping under two marks. [ Page D1. ] Yesterday's drop continued the steep decline in the dollar's value since the meeting of five nations last September at the Plaza Hotel in New York, but the broader objectives of correcting trade flows and reinforcing international cooperation have proved stubbornly elusive for several reasons. [ A1. ]

Interest rates on Treasury securities rose for all maturities, partly in response to the Baker comments on the dollar, which traders said would discourage foreign buying of Treasury securities or other dollar-denominated issues. [ D12. ]

Stock prices closed mixed for the fourth day in a row. The Dow Jones industrial average gained 4.78, to 1,774.18, but more issues fell than gained. Volume slumped to 132.2 million shares. [ D6. ]

Energy futures rallied on the New York Mercantile Exchange, helped by remarks by President Reagan in Louisiana that the U.S. should never again have to depend on foreign sources for oil. [ D13. ] The Economy