Blue Chips Slip as Volume Falls; Small Stocks Up

Blue-chip shares pulled back modestly on Monday after last week’s heady gains, while smaller issues continued to advance.

In other markets, bond yields edged higher, and silver fell below $7 an ounce.

The Dow Jones industrial average eased 8.97 points to 8,180.52 after trading as high as 8,216.65--not far from the record close of 8,259.31 set Aug. 6.

The Dow slipped despite a big gain for General Motors, which surged $2.38 to $62.94 on news of a major stock-repurchase plan.

In the broad market, losers had a tiny edge over winners on the New York Stock Exchange, while winners had the edge on Nasdaq.

Smaller stocks overall were higher, with the Russell 2,000 index rising 0.4% to 447.28.

Blue chips appeared tired after last week, when the Dow industrials surged 3.6%, traders said.

The Russell 2,000 also gained 3.6% last week, but smaller stocks in general remain much further from their 1997 highs than blue chips--and so may be overdue for a catch-up, some analysts say. The Russell is 3.9% below its high set last fall.

Among big-name blue-chip stocks on Monday, “there’s been a little bit of profit-taking after a very, very strong week,” said Robert von Pentz, a managing partner at Columbia Partners. “But the underlying tone seems to be reasonably healthy.”

Others disagreed. “Many of these stocks are starting to nudge up against old resistance levels, and upside momentum may be lacking here,” said A.C. Moore, chief investment strategist at Principal Financial Securities.

With no economic data or major new developments in Asia, Iraq or Washington to contend with, investors had little reason to act Monday, traders said.

Trading volume on the NYSE fell to 542 million shares, well below the pace of recent weeks and the lowest volume this year.

A weak bond market also dampened some stock investors’ enthusiasm. The yield on the 30-year Treasury bond edged up to 5.94% from Friday’s 5.91%.

One potentially bullish sign, however, was that the Dow transportation stock index closed at a new high, rising 46.92 points, or 1.4%, to a record 3,463.17, as airline stocks jumped again.

If the Dow industrials also reach a record soon, that would be a bullish indicator, according to the “Dow Theory.” (Story, D6)

In commodities trading, silver pulled back after last week’s surge. The near-term futures contract in New York fell 11.5 cents to $6.92 an ounce.

Silver rose sharply last week on billionaire investor Warren Buffett’s revelation that he had purchased 130 million ounces of the metal since last July.

Among Monday’s market highlights:

* GM’s gain helped lift Ford $1.19 to $52.63 and Chrysler 38 cents to $36.56.

GM said it will buy back an additional $4 billion of its stock, or about 10% of the total outstanding. The new buyback will begin in mid-March. When GM completes repurchase a year later, the world’s largest auto maker will have bought $9 billion of its stock since January 1997, or about 20% of its stock then outstanding.

* Another auto-related company, Goodyear Tire, shot up $1.69 to $65.25. The company said it plans to almost double sales by 2003 and it disclosed a restructuring in North America that will include the elimination of about 4,000 jobs, or 4% of its work force, in the next five years.

* Some leading technology names gave back a small portion of their recent gains: Intel fell $1.73 to $85.81, Cisco Systems sank $1.94 to $64, Sun Microsystems lost $1.63 to $45.88, and Microsoft was down 94 cents at $157.19.

* E-Trade Group soared $4.19 to $27.38 after the Internet brokerage said it will get prominent billing on Web-TV Networks.

In foreign trading, Hong Kong shares jumped 3.7%, but Asian markets overall were mixed.

Market Roundup, D12