FINANCIAL MARKETS : Tech Shares Keep Rising as Trading Calms

Technology and smaller-company issues rose modestly Friday, still outperforming blue-chip stocks as the surging Nasdaq market finished the week more than 4% higher.

Trading calmed with earnings season winding down and the focus turning to next week’s key economic data.

The Dow Jones industrial average rose 1.08 points to 5,567.99, ending the week with a gain of 32.51. The sluggish blue-chip index continued to trade in a narrow range Friday, moving little more than 20 points in either direction.

The Nasdaq composite and the Russell 2,000 index of smaller companies closed at record highs for the seventh straight session as investors remained bullish about the prospects for smaller enterprises in an improving economy.

The Nasdaq--which rose 2.72 points to 1,186.89 and gained 48.19 points on the week--has surged more than 8% in about two weeks as a series of encouraging earnings reports in the technology sector dispelled fears of a computer industry slowdown.

The Russell 2,000, up 1.59 points to 347.83, has risen more than 5% in the last two weeks.

The American Stock Exchange’s market value index, which is also dominated by smaller companies, rose to its second consecutive record close and eighth in nine sessions. The Amex gained 2.11 points to 593.57, up 7.69 points for the week.

Advancing issues outnumbered decliners by about 13 to 9 on the New York Stock Exchange, where volume totaled 391.05 million shares, down from Thursday’s pace.

The NYSE’s composite index rose 0.53 point to 350.82, up 4.42 points for the week. The Standard & Poor’s 500 stock index rose 0.59 point to 653.46, a gain of 8.39 points on the week.

Trading was noticeably quieter as the mostly upbeat earnings reporting period wound down.

“It was an extraordinarily good season,” said Hugh Johnson, chief investment officer at First Albany, noting that with about 400 companies in the S&P; 500 having reported their first-quarter earnings, more than 56% beat expectations.

Traders are now awaiting next week’s report on April employment. The last two monthly reports have sent financial markets plunging after revealing bigger-than-expected jumps in new jobs.

“We’re going to have a fairly trendless market as we head toward the employment report,” Johnson said. “I believe that report will start to show some softness, which is good news for stocks and bonds, but it always has a big surprise. Just the chance that it’s going to surprise will put a lot of investors on hold.”

Among market highlights:

* Phelps Dodge rose 4 1/2 to 77. Business Week magazine reported the company may be a takeover target for Britain’s RTZ. Both companies declined comment.

* Estee Lauder rose 4 1/8 to 37 1/2 in anticipation of a strong quarterly earnings report next week, analysts said.

* Heartport, a developer of procedures for performing minimally invasive heart surgery, skyrocketed 14 to 35 in its first session.

Overseas, Tokyo’s Nikkei stock average edged higher.

Market Roundup, D4