Just Three Firms Drag Dow Lower

Investors dumped shares of Eastman Kodak, Philip Morris and IBM on Friday, pushing the Dow Jones industrial average lower.

Broader stock measures were mixed, with blue-chip and other large-company shares posting modest gains. But the Nasdaq market turned lower late in the day as investors continued to sour on leading computer-industry shares.

The Dow fell 15.49 to 6,804.79, closing the week with a loss of 130.67. But excluding Philip Morris, Eastman Kodak, and IBM which together fell the equivalent of more than 53 Dow points - the blue-chip barometer would have ended higher on Friday.

Otherwise, the day was notably uneventful considering this week’s mounting anxiety over Tuesday’s Federal Reserve meeting. Even Friday’s “triple-witching” expirations - the quarterly deadline for settling futures and options contracts to buy and sell securities at specific prices - failed to produce the usual volatility.

Analysts said many investors have come to consider it a foregone conclusion that the Fed will raise the central bank’s key lending rates as protection against inflation.

“The market has already adapted to the expected Fed tightening and Tuesday is becoming a nonevent,” said Larry Wachtel, a market analyst at Prudential Securities. “Are we going to replay 1994, with seven Fed tightenings? Or will the Fed raise interest rates next week and that will be it? That’s what the market is looking at now.”

On Thursday, Fed Chairman Alan Greenspan told a congressional panel that the economy has been expanding at a rapid pace that could exacerbate inflationary pressures such as production costs. He again asserted that the central bank may have to raise rates to slow borrowing and spending before inflation has a chance to become a problem.

Eastman Kodak plunged $9.25 to $79 as the most active issue on the New York Stock Exchange after the photographic products company warned that its sales for January and February were flat compared with the same months a year ago.

Also weighing down the Dow was Philip Morris, which fell $4.37-1/2 to $111.50, extending Thursday’s slide on news that a rival cigarette maker had struck a deal with 22 states suing the tobacco industry. The settlement by Liggett Group could undermine the industry’s defenses against health-liability suits.

IBM fell $4.37-1/2 to $132.50 as the Dow’s other big decliner.

“The perception has now spread that the tech group’s fundamentals are slowing down and the price-to-earnings ratios afforded this group (during January’s rally) had factored in a greater growth than will be realized over next two-to-three quarters,” said Ned Riley, chief investment officer at Bank of Boston.

Overseas, Japan’s Nikkei index was up 0.8 percent, Frankfurt’s DAX index rose 1.0 percent and London’s FT-SE 100 rose 0.1 percent.

Advancing issues outnumbered decliners by a slim margin on the NYSE, where volume totaled 534.37 million shares as of 4 p.m.