Stocks up on output, jobs data; S&P closes in on all-time high

NEW YORK - Wall Street carved out a solid advance yesterday after data on job creation, manufacturing, and inflation injected the market with renewed confidence about the economy and sent major indexes to record closes.

The Standard & Poor's 500 index was the biggest gainer among the major indicators and moved toward its all-time trading high.

Investors found reason for optimism in a stronger-than-expected jobs report for May. Nonfarm payrolls rose 157,000 last month, a larger increase than in April and more than analysts anticipated. The unemployment rate held steady at 4.5 percent, as forecast, according to the Labor Department report.

The economic picture appeared brighter still, following a lower reading on inflation from the Commerce Department, and data from the Institute for Supply Management's May survey.

Investors have been trying to glean from recent economic data any clues about the state of the economy and the direction of interest rates. The market hopes a slowing economy will prompt the Federal Reserve to lower rates, something the Fed is loath to do if inflation remains defiantly above the central bank's target. The job figures yesterday pleased Wall Street, however, because they showed growth without an attendant rise in wage inflation.

The Dow Jones industrial average rose 40.47, or 0.30 percent, to 13,668.11, the Dow's 26th record close for the year. The Dow, which tacked on 1.19 percent for the week, also set a fresh trading high of 13,692.00 yesterday.

Broader stock indicators also gained yesterday. The Standard & Poor's 500 index rose 5.72, or 0.37 percent, to 1,536.34. The S&P traded as high as 1,540.56 and advanced toward its record trading high of 1,552.87 set in March 2000. Wall Street marked a milestone this week when the index set its first record close since 2000, signaling the broader market's recovery from the dot-com implosion early in the decade.

The S&P's gains, which totaled 1.36 percent for the week, came as a welcome development for many investors, given that so many investments such as mutual funds are tied to the S&P's performance.

The technology-heavy Nasdaq composite index rose yesterday, advancing 9.40, or 0.36 percent, to 2,613.92. Despite a 2.22 percent advance for the week that far outpaced other major indexes, the Nasdaq remains well off of its closing high of 5,048.62, set in March 2000; the index was arguably bloated by investors' frenzy over high-tech and Internet issues.