Blue Chips Rise in Busy Trading as Nasdaq Dips

Blue-chip stocks ended a volatile session with modest gains Friday as the so-called triple-witching options and futures expirations produced the third-biggest trading volume ever on the New York Stock Exchange.

The Dow Jones industrial average rose 10.76 points to 6,484.40. In early trading, the Dow rose 75 points to 6,548.99, resting briefly above its record close of 6,547.79 set on Nov. 25.

An odd mood produced a striking disparity between the NYSE and Nasdaq, which is loaded with technology issues. The Nasdaq composite index closed 7.30 points lower at 1,288.56.

For the week, the Dow was up 179.53 points, its strongest week since the first full week of November, when blue chips began a scorching monthlong rally of more than 500 points.

With its rebound this week, the blue-chip index has recovered more than its 2.6% loss since Dec. 6, when stocks tumbled after Federal Reserve Chairman Alan Greenspan questioned whether financial markets were in the grips of “irrational exuberance.”

“The market’s on steroids because of triple witching,” said David Shulman, market strategist at Salomon Inc. But he cautioned that Greenspan “still laid down a marker, and you ignore that at your peril.”

Although the Fed left interest rates unchanged earlier this week, Thursday’s and Friday’s increases heighten the chances that the central bank will tighten early next year, Shulman said. “It reduces the amount of freedom the Fed has with regard to monetary policy.” The 30-year Treasury bond yield ended the day at 6.60%, up 0.02%.

While investors were shying from technology stocks Friday, they were flocking to defensive issues such as banks. International Business Machines fell 3 1/2 to 154 5/8, and Intel lost 2 7/8 to 134 5/8. Among banks, J.P. Morgan climbed 5/8 to 98 5/8 and Chase Manhattan rose 3/4 to 91 1/2.

Among market highlights:

* Dendrite International plummeted 11 1/2 to 8 1/8, one day after announcing it would lose money in its fourth quarter.

* Redhook Ale Brewery tumbled 4 5/8 to 9 3/8. The company said its fourth-quarter results will be below expectations.

* Boeing was up 2 1/4 at 105 3/8. Boeing, which earlier this week announced a $13.3-billion deal to buy rival airplane maker McDonnell Douglas, said Thursday that it will nearly double airplane production next year to a record 40 aircraft per month. McDonnell’s shares rose 7/8 to 64 1/2.

* Merck shares rose 1 3/4 to 83, after rising 4 3/8 the previous day. The country’s biggest drug maker agreed to merge its animal health business with Rhone-Poulenc’s similar division, which would create the largest drug company in an $8-billion-a-year market. Rhone-Poulenc Rorer shares rose 2 to 78 5/8.

* 3M shares gained 2 3/8 to 84 5/8. The company and other makers of silicone breast implants won a major victory when an Oregon federal judge ruled that lawsuit plaintiffs failed to produce any reliable scientific evidence that the implants caused health problems in women.

Market Roundup, D4