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MARKET CLOSE: Blue chips tumble; Nasdaq holds ground

Blue-chip stocks, particularly financial issues, were dumped in Friday's triple-witching trading as the Dow Jones industrial average closed off 265 points to 10,449.30. Technology stocks held up well, however, as the Nasdaq composite rose 15 points to 3,860.52.

The expiration of options on stocks and futures added a little extra zing to selling as investors continue to eye depressing profit warnings and a perceptible decline in consumer spending and new home purchases.

Construction starts on new homes and apartments tumbled in May to their lowest level in nearly a year as rising credit costs sapped the economy's most interest-rate-sensitive sector.

"It's just more of the same," said Larry Rice, chief investment officer at Josehpthal Lyon & Ross. "More volatility. More pressure on the financial services, the Xeroxes, the P&Gs of the world and fewer Nasdaq stocks."

Xerox (NYSE: XRX) got investors off on the wrong foot, falling 5 1/16, or 20 percent, to 20 1/4 after warning that it will miss analysts' profit estimates this quarter.

"Everytime you have a Xerox implode, it's another reason to buy these overly inflated Nasdaq stocks, which we're seeing and that's why Nasdaq is exhibiting some better relative strength," Rice said.

Rambus (Nasdaq: RMBS) was one of those strong Nasdaq stocks Friday, surging 25 1/2, or 45 percent, to 82 7/16 4-for-1 stock split took effect and inked a licensing deal with Toshiba.

Intel (INTC) fell 2 3/16 to 126 1/16. Advanced Micro Devices (AMD) picked up 3/8 to 83 1/4 and IBM (IBM) closed off 2 to 114 13/16.

Cisco Systems (CSCO) moved up 1 5/16 to 67 13/16. Nortel Networks (NT) trimmed 1/4 to 67 1/4 and Lucent Technologies (LU) finished up 1/8 to 60 1/8.

Covad (Nasdaq: COVD) plunged 6 13/16 to 18 7/16 after announcing it will buy privately held BlueStar Communications Inc., a provider of broadband and Internet services for small and medium-sized businesses in the Southeast.

Microsoft (MSFT) added 3/16 to 72 9/16.

Yahoo! (YHOO) picked up 1 1/4 to 140 15/16 while Amazon.com (AMZN) and eBay (EBAY) shed 5/16 and 2 15/16 a share, respectively. Lycos (LCOS) slid 1 5/16 to 65 and America Online (AOL) ended off 1/2 to 54 1/2.