Capping a wild week, the stock market seized on positive news about inflation to post its third straight gain Friday, although prices eased from their best levels of the day and pulled some major indexes back from historic highs.
Bond prices also surged, and long-term Treasury rates tumbled to their lowest levels in more than 1 1/2 years, as the credit markets also embraced the government reports that signaled a moderately growing economy with low inflation.
The stock and bond rallies, in turn, propelled the U.S. dollar sharply higher against other major currencies.
Friday's advance enabled stocks to finish a volatile week on an upbeat note. The market, led by its technology group, was pummeled early in the week amid investors' growing uneasiness that corporate earnings growth was stalling. But strong profit reports later in the week, together with the appealing economic reports, eased those fears.
The Dow Jones average of 30 industrial stocks climbed 28.90 points to 4,793.78, giving it a 24.57-point gain for the week and leaving it less than 10 points shy of its record of 4,801.80 reached on Sept. 14.
The blue-chip average had been up more than 50 points with an hour left in the session, which triggered the New York Stock Exchange's "circuit breakers" that limit computerized buying. The limits remained in effect for the final hour, during which prices drifted back.
The Standard & Poor's 500 composite index likewise was trading above its historic high of 586.77 points before the last hour clipped its gains. But the index still rose 1.40 points to 584.50.
Gainers overall outpaced losers nearly 2 to 1 on the Big Board, and NYSE volume was a busy 374.68 million shares, up from 344.07 million Thursday.
Technology stocks generally posted gains to further steady themselves after their deep retreat Monday. Ascend Communications, for instance, soared 5 3/4 to 49 1/4 after the maker of computer-networking products reported sharply higher profits.
The Nasdaq composite index, which is peppered with technology shares, rose 2.75 points to 1,018.38, giving it a 6.34-point gain for the week despite Monday's setback.
The credit markets, meanwhile, took their cue from the economic reports and lifted prices of the bellwether 30-year Treasury bond by nearly 1 1/4 points, or $12.19 per $1,000 in face value.
The bond's yield, which moves inversely to its price, dropped to 6.30%--its lowest point since February, 1994--from 6.39% on Thursday. The rate on the Treasury's 10-year note fell below 6%, closing at 5.96%.
Before the stock market's opening bell, the Labor Department reported that consumer prices inched up only 0.1% in September and that prices excluding those for food and energy rose 0.2%. Both figures were in line with economists' predictions.
Meanwhile, the Commerce Department said retail sales rose 0.3% last month and that the figure excluding automobile sales was an even stronger 0.7%. Both figures were slightly better than many expected.
"The market had gotten so emotional Monday and Tuesday that it was ready to seize on any good news," said Eric T. Miller, chief investment officer at Donaldson, Lufkin & Jenrette Securities Corp.
The stock market's rebound, Miller said, signaled that many investors believe that "most of the negative [earnings] announcements are largely behind us."
David Diamond, a vice president at investment firm Boston Co., said technology stocks also benefited Friday from "short covering." That occurs when investors who had earlier sold the shares in the hope they would fall in price buy the stocks back to lock in their profits.
Among the market's highlights:
* Actively traded technology stocks included Intel, down 1 to 62 3/4; Microsoft, down 1 3/8 to 86 1/4; Sybase, up 1 7/8 to 34, and Digital Equipment, up 3 1/4 to 49 3/8.
* Carr Gottstein Foods surged 2 3/8 to 8 1/2 after the retailer announced plans to repurchase up to 49% of its stock for $11 a share.
* Financial stocks drew support from the prospect of lower interest rates. BankAmerica rose 1/4 to 63 1/2 and J.P. Morgan gained 5/8 to 81 1/4.
In overseas markets, the FTSE-100 index in London jumped 44.20 points to 3,568.00, and Frankfurt's DAX index climbed 38.71 points to 2,196.83. But in Tokyo, the Nikkei-225 index fell 90.57 points to 17,880.83, and Mexico City's Bolsa index dropped 24.89 points to 2,310.60.
In foreign exchange markets, the dollar rose to 100.97 Japanese yen from 100.18 on Thursday, and it reached 1.4267 German marks, up from 1.4185.
* LOW INFLATION
Consumer prices for goods and services barely budged in September. D2