Blue-Chip Gains Keep New Year’s Rally Alive

Blue-chip stocks rose Wednesday as investors countered concerns about the economy by seeking less risky issues. But a sell-off in technology shares sacked the over-the-counter market.

The Dow Jones industrial average rose 16.62 points to finish at 5,194.07.

“It’s a vicious, two-tier market,” said Larry Wachtel, an analyst for Prudential Securities. “If you’re in a handful of blue chips, you’re sharing in another great day. If you’re in technology, you’re getting whacked around.”

Advancing issues led decliners by nearly 5 to 3 on the New York Stock Exchange. Big Board volume was heavy at 468.92 million shares, almost 25 percent better than on Tuesday.

Semiconductor issues fell after PaineWebber downgraded five of them, saying that despite strong industry trends, those stocks have a big downside risk. Alex. Brown & Sons also down-graded three technology stocks.

Some of the stocks that moved substantially Wednesday:

NYSE

Westinghouse Electric, up 1-1/4 at 18-3/8.

Northrop Grumman, down 2-3/4 at 62.

Westinghouse agreed to sell its defense and electronic systems business to Northrop Grumman for $3 billion in cash. Northrop Grumman will also assume $600 million in pension and other post-retirement costs for the employees of the business. The deal, expected to close in the first three months of this year, will help finance Westinghouse’s purchase of CBS Inc.

Silicon Graphics, down 1-5/8 at 215/8.

The Mountain View, Ca.-based company, which makes workstation computers, said Tuesday its earnings for the fourth quarter would be below analyst expectations.

Home Depot, down 7/8 at 46-1/2.

Goldman Sachs removed the stock from its priority list, but kept it on its recommended list and maintained a buy rating.

NASDAQ

Applied Materials, down 3-7/8 at 37-1/2.

Lam Research, down 3-1/4 at 42.

Novellus Systems, down 3-5/8 at 48-1/2.

Brooks Automation Inc., down 2-3/16 at 11-13/16.

KLA Instruments, down 1-7/8 at 24-5/8.

PaineWebber downgraded these semiconductor companies, saying that despite strong industry trends, these stocks have a strong downside risk.

AMEX

Echo Bay, up 1/8 at 11-1/4

Royal Oak Mines, up 1/8 at 4-1/16

Pegasus Gold, up 5/8 at 15-3/8.

Gold stocks rose with spot gold prices, which gained $4.30 an ounce to $395.50 in New York commodity trading.