Question: Quotation marks or italics? His last words were "clock" and "good-bye." Clock and good-bye are used as words and are not quotations, but they are not unusual or in need of emphasis so I don't see the reason for italics. If the answer is personal preference, is one choice more popular, more formal than the other? I could not find a clear answer on here so I thought I would ask. The English Usage Stack Exchange site is amazingly useful. Many thanks to all who contribute.

Answer: 
If I understand your question correctly, you're asking for the proper way to denote that two specific words were those said by someone: quotation marks or italics. 

The answer to your question is ... Either. 

Quotation marks are perfectly appropriate for reported speech. It doesn't require a proper sentence for quotation marks to be appropriate. *He just said "yup" to all my questions.*

Italics likewise set apart speech. They do this by the typeface change making it clear what you're trying to denote as different from the rest of the sentence structure. In this case, you're using the context for the reader to know it's reported speech.

In the end, it comes down to style. What you think *looks* best and conveys your meaning best. 

As Edwin Ashworth points out in comments, many prescriptive style manuals will make specific recommendations. But, recommendations are just that. No one will find your intentions indecipherable should you pick one vs the other.
Of course they are *quotations*, that's the definition of "his words were"