NEW YORK -- U.S. stocks gained yesterday as interest rates fell to a two-week low after government officials said a drop in unemployment to 6 percent last month may have been overstated.
Shares slid in early trading after a Labor Department payroll report showed hourly wages rose in May, rekindling concern about mounting inflation and interest rates. Later, two rounds of computer-driven buy orders helped revive stock prices.
Job growth "continues to be positive," especially for service jobs, said Robert Freedman, chief investment officer at John Hancock Mutual Funds in Boston. "The fundamentals are still there for a bull market: fairly low interest rates and a slow-growing economy."
The Dow Jones industrial average rose 13.23, to 3,772.22, after first sliding 15.08 as yields on the benchmark 30-year Treasury bond rose to 7.40 percent and then tumbled to close at 7.27 percent. Gains in Procter & Gamble Co., Minnesota Mining & Manufacturing Co. and Sears, Roebuck & Co. pushed up the average.
Among broader market indexes, the Standard & Poor's 500 increased 2.48, to 460.13, as retail, food, phone and drug stocks rallied. The Nasdaq combined composite index advanced 2.88, to 742.38, fueled by gains in Tele-Communications Inc., Microsoft Corp. and MCI Communications.
The American Stock Exchange market value index rose 1.31, to 441.84, while the Russell 200 index added 0.11, to 252.10.
More than 13 stocks rose for every eight that fell on the New York Stock Exchange, where volume rose 272.1 million shares from 271.1 million Thursday.
Bond prices rallied and interest rates fell after the government said the economy added 191,000 jobs last month, fewer than economists' forecast of 289,000 new jobs. That eased concern that rapid economic growth would force the Federal Reserve to raise rates for a fifth time this year at next month's policy meeting.
Early gains evaporated as investors grew concerned that higher wages in May and rapid job growth would eventually lead to higher prices.
Those concerns were defused by remarks from Commissioner of the Bureau of Labor Statistics Katharine Abraham, who said the decline in the jobless rate to 6 percent "probably overstates what's going on."
Optimism about inflation was further roused by a drop of 2.65 points in the Commodity Research Bureau's index of 21 key commodity prices, to 233.25. Gold, often used as a hedge against inflation, dropped $3.60 an ounce for delivery in August, to $383.20.
IDB Communications Group Inc., Microsoft, Kmart Corp., General Motors Corp. and Bausch & Lomb Inc. led the most active list in composite trading.
General Motors Corp. fell $1.50, to $52. The automaker plans to issue 17.7 million shares as part of a plan to convert all of its series A preference equity redemption cumulative stock.
Cable television stocks rallied as the latest industry alliance, Times Mirror Co.'s $2.3 billion agreement to combine its cable TV operations with those of Cox Enterprises, fueled optimism about cable TV's prospects.
Tele-Communications Inc., the largest U.S. cable operator, rose 93.75 cents, to $22.875.
Times Mirror shares rose $3.75 to $35.75.
Retail stocks rose, rebounding from Thursday's decline after the release of disappointing May sales figures. Wal-Mart Stores Inc. gained $1.25, to $23.875; Sears, Roebuck & Co. rose $1, to $51; Dayton-Hudson Corp. added 62.5 cents, to $78.50; and Kmart Corp. gained 62.5 cents, to $78.50.
Food stocks gained after Kellogg Co., up $2.375, to $55.375, was raised to "buy" from "hold" at CS First Boston, and Sara Lee Corp., up 50 cents, to $22.75, was added to Goldman Sachs' list of recommended stocks.
Quaker Oats Co. added $2.625, to $70.50; General Mills Inc. rose $1.125, to $56.375; Campbell Soup Co. advanced $1.125, to $38.50; and CPC International Inc. climbed $1.125, to $51.25.
For the week, the Dow Jones industrial average gained 15.08 points.
The Nasdaq index rose 9.24 for the week, and at the American Stock Exchange, the market value index gained 0.90. The Standard & Poor's 500 composite ended the week up 2.80