Dow Closes Above 8,500; Nasdaq Slips

Blue-chip stocks jumped to their third straight record Friday, pushing the Dow Jones industrial average to close above 8,500 for the first time.

Winners narrowly topped losers on the New York Stock Exchange and on Nasdaq, but some key indexes closed modestly lower. The Nasdaq composite eased 6.60 points to 1,770.51.

The session was a fairly calm end to another strong week, as the market continues to defy naysayers--racking up big gains for a fourth consecutive year.

The Dow rose 55.05 points, or 0.7%, to a record 8,545.72 on Friday, after trading as high as 8,566. The Standard & Poor’s 500 inched up, also to a new high.

For the week the Dow gained 131.78 points, or 1.6%, and now is up 8.1% year-to-date. The index surged 22.6% in 1997, 26% in 1996 and 33.5% in 1995.

The Nasdaq index rose 2.5% for the week and is up 12.8% this year, fueled by big gains in key technology stocks.

While U.S. stock prices are historically high relative to underlying earnings, economic reports this week suggested a good backdrop for a continuing bull run: healthy growth with little inflation.

The government said the economy grew at a 3.9% annual rate in the fourth quarter, down from an original estimate of 4.3% but still strong.

What’s more, a report on manufacturing activity in the Chicago area showed no slowdown in business this month, despite the Asian economic crisis.

The bond market helped support stocks on Friday, as yields eased a bit. The 30-year Treasury bond yield fell to 5.92% from 5.95% on Thursday, though it was still up from 5.87% a week ago.

Treasury Secretary Robert E. Rubin suggested that interest rates may fall in coming months as investors are attracted to U.S. bonds. There’s a “general view in the world that our economic house is in pretty good shape, and that gives people confidence in this country,” Rubin said in an interview with Bloomberg News. “And if they’re confident in the country, they’re confident in the currency.”

On a different subject, Rubin said President Clinton will oppose any effort by Republicans in Congress to repeal last year’s tax-law change that lengthened the holding period for long-term capital gains to 18 months from 12 months.

Among Friday’s highlights:

* The Dow was powered by Hewlett-Packard, up $2 to $67; Eastman Kodak, up $2.31 to $65.63; Caterpillar, up $1.38 to $54.56; and J.P. Morgan, up $2.50 to $119.50.

* Dell Computer soared $6.63 to a record $139.88, but other tech stocks were mixed. Intel fell $2.63 to $89.69 and IBM lost $1.06 to $104.44.

Also, VLSI Technology plunged $5.44 to $19.31 after warning that slower Asian sales of cellular phone microchips would affect first-quarter earnings.

* PaineWebber rocketed $6.13 to $41, with much of the gain coming from a single trade after the close. Investors didn’t have an explanation, and the brokerage had no comment. It has long been the subject of takeover speculation.

* Stocks rising in the wake of earnings reports included Viacom Class B shares, up $2.13 to $48, and Pinkerton’s, up 44 cents to $23.

* Union Pacific continued to slide, declining 94 cents to $51.13.

In foreign trading Tokyo shares rallied, with the Nikkei-225 up 2% to 16,831. Hong Kong’s market rose 2.3% and Seoul’s rose 4.5%.

Market Roundup, D4