Stock Market Rally Fizzles; Dow Drops 3.98

Stocks fell slightly Friday, ending a day of gyrations and failing to extend Thursday’s attempt at a recovery.

The Dow Jones industrial average closed down 3.98 points at 5,061.12. The blue-chip index opened stronger, got pushed sharply lower by computer-driven sell programs at late morning, but pared its losses along with bonds through the early afternoon.

With Friday’s downturn, the Dow industrials lost 120.31 points for the week.

On Friday, declining issues edged out advancers by about 10 to 9 on the New York Stock Exchange. Volume was moderate at 376.81 million shares, down from Thursday’s pace.

Program traders had the upper hand in the absence of any hard political or economic news. Many traders, recalling the bad weather on the East Coast early this week, left their posts early ahead of another storm.

“This market really rolled over,” said Arthur Hogan, the top stock trader at Dean Witter Reynolds. “There were some signs of followthrough from yesterday’s gains at the open, but they didn’t hold. The sell programs got triggered and exaggerated things.”

Some of the stocks that moved substantially Friday:

NYSE

Merck rose 5/8 to 62-1/8.

Johnson & Johnson rose 2 to 85-3/4.

Pharmacia Upjohn rose 7/8 to 37.

Pharmaceutical stocks rose as investors bought shares of companies that are perceived to remain profitable even in an economic downturn. Merrill Lynch upgraded Johnson & Johnson.

Micron Technology fell 2-7/8 to 33.

Motorola fell 3/4 to 49-3/8.

IBM fell 7/8 to 86-3/8.

Computer-related stocks resumed their downturn after recovering Thursday from steep losses early in the week.

Cypress Semiconductor rose 1/4 to 11-1/2.

The San Jose, Calif., maker of digital integrated circuits said it plans to buy back from investors an additional $20 million of its stock, increasing total buyback to $70 million.

NASDAQ

Netmanage fell 3-11/16 to 10-7/8.

Shares of NetManage Inc. fell more than 25 percent Friday after the company said it expects earnings for the latest fourth quarter to be lower than year-ago results and lower than Wall Street’s estimates.

Bay Networks fell 1/8 to 39-3/8.

The computer network maker said its second-quarter earnings were 29 cents per share, including one-time charges for its acquisition of Xylogics.

Bay Networks said strong second-quarter sales of switching products enabled it to gain market share. Analysts at Smith Barney and Gruntal & Co. upgraded the stock.

Dell fell 4-7/8 to 28-5/8.

Gateway 2000 fell 1-1/2 to 20-5/8.

Gateway fell in sympathy with Dell after Morgan Stanley cut its earnings estimates for Dell, citing concerns about product mix and the pace of government business.

U.S. Healthcare rose 1-5/8 to 43-1/2.

The Fairfield, N.J., company said it has expanded its network in New Jersey. The company more than doubled its network of participating primary care physicians in New Jersey and increased the number of participating specialists by more than 50 percent in the last year.