The calendar says it is late June, but on Wall Street it feels disturbingly like late March. The sudden plunge of the dollar, which fell temporarily below the key 100-yen mark Tuesday before recovering slightly, has pulled U.S. stock and bond markets down sharply, in an eerie replay of the sell-off that dominated the last two weeks of the first quarter. The Dow industrial average lost 33.93 points to 3,707.97 on Tuesday, its lowest close since mid-May. And the yield on 30-year Treasury bonds rose to 7.49 percent from 7.46 percent on Monday, nearing the 1994 yield, which held up reasonably well even as the Dow slumped 300 points in late March, have led this decline. And in recent days the selling has spread to Canada, Mexico and many Asian markets. Everybody wants to blame the markets' turmoil on the falling dollar, of course, and that is tempting enough. For one thing, a weak dollar raises the prospect of higher U.S. inflation because prices of imported goods can automatically rise as the buck slides. Moreover, if the dollar's decline worsens significantly, the Federal Reserve Board may be compelled to raise interest rates to try to defend the currency. Wall Street had just begun to feel confident that the Fed would wait until late summer, at the earliest, before considering whether the economy warranted tighter credit. Now all bets on a benign Fed are off, and that is bad news for countries whose short-term interest rates are effectively tied to ours. But some Wall Streeters argue that the weak dollar is just a symptom of the market's real problem: We are in a nearly global bear market in stocks and bonds, and that means sellers are in control. Despite periodic rallies -- like the one U.S. stocks enjoyed in late May and early June -- the overriding trend in financial assets is down, the bears argue. "I see this as a step-by-step, grinding kind of decline," says Richard McCabe, technical market analyst at Merrill Lynch & Co. in New York. Not surprisingly, there are still plenty of people who resist the bear scenario. The optimists either see the dollar stabilizing soon, or they make the point that the dollar's latest slide is a blip compared with how much it fell between 1985 and 1993. (Remember, the dollar bought 250 Japanese yen in the mid-1980s. So what is the big deal about a drop from 111 yen to 100 yen this year?) More important than the buck is the frightening surge in long-term bond yields worldwide this year, in part a winding down of wild speculation in bonds during 1993, many Wall Streeters say. And the optimists among them believe that yields already have jumped this year to levels that are ridiculously high relative to the global economy's growth rate and to inflation. In Germany, for example, the yield on the benchmark 10-year government bond closed at 7.32 percent on Tuesday, up from 5.89 percent in early February and its highest since December 1992. Yet inflation in Germany is running at a 3 percent annual rate, which means the "real" yield on the 10-year bond currently is more than four percentage points -- quite a payoff historically."These rates are too high relative to any kind of inflation we see worldwide at the moment," argues Thomas Robinson, Merrill Lynch's international stock strategist. The bull scenario is that the U.S. economy slows in the second half, thanks to the Fed's first-half credit-tightening moves; Europe and Japan recover at a modest pace and without higher inflation, allowing long-term interest rates in those economies to resume their declines; and corporate profits continue to rise worldwide, underpinning stock prices.The problem with the bulls' case so far this year is that something always seems to come along to botch it up. In winter, the problem was the unwinding of the crazed stock and bond speculation fueled by so-called hedge funds last year; in the spring, rising commodity prices fanned new worries about inflation; and now, the dollar is sinking, unnerving investors who naturally respond badly to any unforeseen market shock. "When currencies move quickly, it scares people," says A.C. Moore, investment strategist at money manager SBCM/Argus in Santa Barbara, California. "It spurs central banks into action."The danger now is that the markets' latest woes will encourage more American investors to do what their European counterparts have already been doing to an unusually large degree -- to forget the bullish case and just stay invested in short-term securities for safety's sake. Or to run to gold and other hard assets that traditionally offer refuge. That is a recipe for a bear market. And there is a good argument to be made that some European stock markets are already deep in a bear phase, on the heels of bear-like declines in key Asian markets earlier this year. In the United States, the blue-chip Standard & Poor's 500 stock index now is off just 3.2 percent from year's end, though its decline nearly reached 10 percent from February peak to spring low. James Stack, publisher of the InvesTech market newsletter in Whitefish, Montana, and an unabashed bear, concedes that the relatively small decline in U.S. stocks thus far makes it tough for most Wall Street pros to join the bear camp. Ditto the public, he says. "There's a lot of talk about bearishness, but when one looks at the new money still going into stock (mutual) funds, the public is not bearish," Stack says.