Blue Chips Hit Another Record High

Blue-chip stocks rallied to a record closing high in one of Wall Street’s busiest days Friday, despite a proposed landmark settlement with state prosecutors that depressed tobacco shares.

The Dow Jones industrial average finished up 19.45 points at 7,796.51, off its session high of 7,834. The close eclipsed the previous record of 7,782.04 set last Friday. For the week, the index was up 14.47 points.

But the rally was not broad-based--losing issues outpacing gainers by a 4-3 margin on the New York Stock Exchange in its third-busiest day ever.

The Standard & Poor’s 500-stock list rose 0.71 point to 898.70, and the NYSE composite index rose 0.08 point to 467.84. It was the second record in a row for both indexes. The Nasdaq composite index fell 0.04 point to 1,447.10.

Traders said “triple witching” expirations of individual and index options and index futures skewed the day’s results and bloated trading volume.

Tobacco stocks, which had already risen about 10% in the past week in anticipation of a deal, declined once a proposed one was reached.

“The settlement is starting to get baked into the stock price, and we’re going to see some volatility as the details get hashed out,” said Guy Truicko, a portfolio manager at Unity Management in Lake Success, N.Y.

Still, stocks benefited from strength in bonds. The yield on the 30-year Treasury bond fell to 6.66% from 6.67% late Thursday.

Among Friday’s highlights:

* 3M, up 2 1/4 to 102 1/8, led the Dow higher, as did Allied Signal, up 1 7/8 at 83 3/4.

* Consumer stocks lost ground. Procter & Gamble slid 2 to 140 1/8, and Disney declined 1 1/8 to 82 1/4.

* Airline issues recovered from Thursday’s dip on fears that there may be a change in the federal airline tax. AMR rose 1 5/8 to 94 7/8, UAL advanced 2 1/4 to 74 1/8.

* Technology issues put in a second strong day after faltering earlier in the week. IBM rose 1/4 to 89 7/8, Hewlett-Packard added 1 1/8 to 55 and Gateway 2000 advanced 5/8 to 33 3/4. Intel rose 5/16 to 146 3/4, Microsoft rose 9/16 to 129 7/8 and Dell Computer rose 1 3/16 to 119 1/2.

* Ikon Office Solutions slumped 3 1/4 to 22 3/4 after the office products distributor projected disappointing third-quarter results.

Market Roundup, D4