Higher Jobless Rate Triggers Stock Market Rally

Stocks soared Friday on the heaviest trading day so far this year and the sixthbusiest on record as an unexpectedly weak jobs report repressed fears of inflation and higher interest rates.

The Dow Jones industrial average rose 57.87 to 3,928.64, posting the biggest one-day gain since Sept. 15. The blue chip index rose as much as 74 points earlier in the session before relinquishing some of its gains in the last hour of trading.

Stocks followed the bond market higher, where the 30-year bond was up 1 9-32 points late in the day and its yield, which falls when prices rise, fell to 7.62 percent from 7.73 percent on Thursday, the lowest level in five months.

The buying was sparked by a Labor Department report that unemployment rose to 5.7 percent last month from 5.4 percent. Only 134,000 jobs were added to non-farm payrolls.

The rise in unemployment surprised economists, who had expected the unemployment rate to decline.

The data fueled market sentiment that the economy is growing at a non-inflationary pace, and that the Federal Reserve will not raise interest rates further.

Advancing issues led decliners by about 7 to 2 on the New York Stock Exchange. Big Board volume was very heavy at 440.95 million shares as of 4 p.m., the sixth-heaviest day on record. Volume was 322.04 million on Thursday.

Overseas stock markets were mixed, falling 0.4 percent in Tokyo but rising 0.6 percent in Frankfurt. The FT-SE 100 index in London rose 0.82 percent.

Some of the stocks that moved substantially or traded heavily Friday:

NYSE

Telefonos de Mexico’s American depositary shares rose 3/4 to 34-1/4.

Mexican stocks rose in sympathy with U.S. financial markets.

Citicorp rose 1-7/8 to 42-7/8.

BankAmerica rose 1-3/8 to 45-5/8.

Morgan Stanley rose 3-1/8 to 65.

Banking and brokerage stocks rose after an unexpectedly weak unemployment reading led analysts to conclude that inflation is not too high.

News Corp. rose 5/8 to 17-3/8.

Merrill Lynch reportedly upgraded the stock to “buy” from “above average.”

Boeing rose 1-1/2 to 47-3/4.

The aircraft manufacturer said Thursday it would cut 7,000 jobs. Cowen & Co. upgraded the stock.

NASDAQ

Intel rose 1 5-16 to 73-1/2.

The computer chip maker said Thursday it would lower its price on Pentium and 486 chips.

Barefoot Inc. fell 6 to 10-1/4.

The company reported third-quarter net earnings of 10 cents per share from 13 cents a year ago on disappointing revenue growth. Analysts had expected 17 cents in profits. Prudential Securities downgraded the stock to “hold” from “buy.”

Adaptec rose 1-1/8 to 29-3/8.

The maker of computer data flow systems said it would diversify into high-speed networking hardware, and offer it at a price break.

AMEX

Charter Medical rose 1-3/8 to 17-1/8.

Donaldson, Lufkin & Jenrette Securities began coverage of this hospital operator with a “buy” rating.