FINANCIAL MARKETS : Blue Chips Ease; Smaller Stocks Gain

The stock market’s split personality continued for a fourth straight session Friday, with smaller issues rising as blue chips fell.

The recently rebounding dollar, a major reason for stocks’ divergences, gained modestly against major currencies after losing ground Thursday.

On Wall Street, the Dow Jones industrial average slipped 13.03 points to 4,617.60 in a session affected by technical trading related to the regular monthly expiration of stock index options.

The stronger dollar also continued to weigh on blue-chip multinationals, on worries that their foreign earnings will be reduced by the healthier greenback.

For the week, the Dow slipped 0.70 point, as four days of losses all but wiped out Monday’s 41.56-point jump.

As the Dow has faded, however, stocks of smaller companies have taken the lead. On Friday the Russell 2,000 index of smaller stocks rose 0.65 point to a record 304.30. The index gained 1.7% for the week.

Also, the Nasdaq composite index, made up mostly of smaller stocks, rose 2.04 points to a record 1,031.28 on Friday. Its gain for the week: 2.7%.

“What you’ve got is the multinational companies treading water because of consideration about the stronger dollar,� said John Shaughnessy, director of research at Advest Inc. in Hartford, Conn. He thinks the Dow could fall as low as 4,500 before stabilizing.

Meanwhile, many investors are hunting for stocks of smaller firms whose fortunes are less dependent on foreign business.

Also buoying the Nasdaq market in particular, analysts say, is continued robust earnings growth at technology companies.

Still, New York Stock Exchange issues gave a decent account of themselves Friday, with winners topping losers by 12 to 10.

There was little action in other markets. The dollar rose late in the day, closing at 97.40 yen in New York, up from 97.05 on Thursday.

Bond yields were largely unchanged, awaiting the Federal Reserve Board’s policy meeting on Tuesday. Most economists expect the Fed to leave short-term interest rates where they are.

Among Friday’s highlights:

* Blue-chip shares dragging the Dow lower included Coca-Cola, which fell 1 3/8 to 63 after brokerage Goldman Sachs downgraded the stock to “market performer� from “moderate outperformer.�

Other multinationals losing ground included Kodak, down 1 1/4 to 57 3/4; IBM, off 2 1/4 to 111 3/8; Caterpillar, down 1 to 67 3/4; and Colgate-Palmolive, off 3/4 to 66 3/4.

* Tech shares were mixed. Cisco Systems shot up 5 15/64 to 66 7/64 after the computer networker said quarterly earnings soared 50%.

Other winners included Alantec, up 2 to 39 1/2; 3Com, up 2 5/8 to 80 7/8; Dell, up 1 7/8 to 76 1/8; Xircom, up 7/8 to 11 7/8; and Filenet, up 2 to 47 1/4.

But profit takers clipped Autodesk, which slumped 3 3/8 to 47 1/2; Microsoft, down 2 to 97 1/8; and Compaq, off 1 5/8 to 52 5/8.

* Biotech stocks staged another advance, pacing the rally in smaller stocks. Amgen jumped 1 1/8 to 48 5/8 (it split 2-for-1 this week), Biogen gained 1 5/8 to 54 1/8, Chiron leaped 1 3/4 to 89 3/4 and Somatogen soared 1 5/8 to 21 7/8.

* Many bank stocks rallied anew. Wells Fargo rose 2 3/4 to 180 1/2, Union Bank gained 1 1/2 to 52, Sumitomo Bank jumped 3/4 to 22 3/4 and NationsBank was up 1/2 to 59 7/8.

Overseas, Tokyo’s Nikkei-225 index lost 117.21 points to 18,032.49, while London’s FTSE-100 zoomed 39.2 points to 3,509.80, nearing its all-time high of 3,520.30.

In Mexico, the Bolsa index inched up 1.53 points to 2,486.95.

In commodities markets, oil prices rose amid concern that threatening Iraqi troop movements this week make the lifting of an embargo on its oil exports unlikely. Crude oil futures for September added 21 cents to $17.87 a barrel.

Silver surged for a third day amid concern about tightening supplies. August silver futures jumped 11.8 cents to $5.69 an ounce on the Comex.