Dow Nears 6,100 Mark While Small Stocks Lag

Blue-chip stocks continued to advance Friday while smaller issues lagged, repeating the pattern of recent days as investors seek relative safety in big names.

Meanwhile, oil prices jumped to fresh post-Gulf War highs.

Capping a historic week, the Dow Jones industrial average surged 35.03 points to a record 6,094.23 on Friday, just four days after closing above 6,000 for the first time.

For the week the Dow rocketed 124.85 points, or 2.1%, as the 1990s stock bull market entered its seventh year.

But small-company stocks slipped Friday and for the week, on balance. The Russell 2,000 index of smaller stocks dipped 0.35 point to 347.85 on Friday. For the week it lost 0.04 point.

The Nasdaq composite index of mostly smaller stocks, heavy with tech issues, added 0.52 point to 1,242.48 on Friday but was off 0.5% for the week, as profit-takers hit many tech stocks.

Strong third-quarter earnings from some major companies this week--including General Electric, Merck and GTE--have brought new buyers into those stocks, and fostered the idea that big firms’ earnings may hold up well even if the U.S. economy slows, as expected.

In contrast, investors don’t seem to have the same faith in many smaller companies.

Many technology issues, meanwhile, were hammered this week despite good earnings reports, as some investors cashed out in the wake of the stocks’ recent runup.

An exception Friday was IBM, which leaped 3 3/4 to 129 3/8 ahead of its earnings report, due Monday.

IBM’s rise, and strength in major energy stocks as crude prices jumped, helped overcome a 5 3/8-point drop in Philip Morris, to 92. The tobacco giant was hurt by revelations of new threats to the tobacco industry’s defense against smoker-liability suits.

The bond market cooperated with stocks Friday, as interest rates were largely unchanged. The 30-year Treasury bond yield held at 6.80%, down from 6.85% a week ago.

Larry Rice, investment chief at Josephthal, Lyon & Ross, cautioned that “both the stock and bond markets are getting very overbought,” leaving them vulnerable to negative news.

But so far, little seems capable of shaking investors. Some analysts worry, though, that a continuing rise in oil prices could eventually unnerve Wall Street.

On Friday crude oil futures for November gained 37 cents to $25.79 a barrel, the highest close since January, 1991, in the midst of the Persian Gulf War.

Cold weather sweeping into the northern United States has both traders and government officials worried about low heating oil inventories, after last year’s frigid Eastern winter.

Oil inventories have been relatively tight all year, as refineries have failed to rebuild stocks fast enough. The Department of Energy said this week that U.S. heating oil stocks were down 27% compared to the same time last year, with key East Coast inventories off a huge 43%.

But Energy Secretary Hazel R. O’Leary announced Friday after an extraordinary gathering of 21 oil executives that the Clinton administration would side with the companies, and refuse an appeal by consumer groups that it take emergency action to guarantee heating oil inventories in the Northeastern United States.

Among Friday’s highlights:

* Energy stocks rising included Exxon, up 1 1/4 to 89 3/8; Mobil, up 2 1/8 to 120 7/8; Unocal, up 3/4 to 37 1/8; and Sonat, up 1 3/4 to 48.

* Earnings reports pushed EMC up 2 to 26 1/2 and Iomega up 1 3/16 to 24 1/16. But McDonald’s eased 1/8 to 46 1/8 on its report, and Xerox plummeted 8 1/4 to 48 3/4 on a very disappointing report.

* Pacific Gas & Electric slid 3/8 to 22 7/8, continuing its decline after Wednesday’s announcement of a 39% dividend cut.

* Southland-based sunglasses maker Oakley slumped 2 to 15 1/8 after brokerage Alex. Brown downgraded the stock to “buy” from “strong buy,” citing inventory problems among key retailers. But Merrill Lynch said Oakley’s shares have “substantial upside” from current levels.

Market Roundup, D4