Techs Lead Broad Rally; Bonds Quiet

Stocks rallied modestly Thursday as Wall Street approached today’s widely awaited May employment report with surprising confidence. Bonds ended little changed.

The Dow Jones industrial average rose 35.63 points to 7,305.29, and the Nasdaq composite index, which took a sizable hit earlier in the week, gained 10.38 points to 1,390.05.

Winners topped losers by 15 to 10 on the New York Stock Exchange and by 23 to 17 on Nasdaq.

And the Russell 2,000 index of smaller stocks rose 2.32 points to a record 384.99. Analysts said that performance showed continued investor demand for smaller stocks, which have lagged blue chips so far this year.

The broad rally, which first lifted technology stocks but spread quickly to financials, transportation stocks and other sectors, came as a surprise to many on Wall Street.

“It’s definitely intriguing that the market has the confidence to run up ahead of the employment number,” said Scott Bleier, chief investment strategist at Prime Charter Ltd. “This seems to be a bet on a benign number.”

The bond market also was calm. The yield on the 30-year U.S. Treasury bond was little changed, edging down to 6.87% from Wednesday’s 6.88%.

Today’s employment report could be key in determining whether the Federal Reserve Board tightens credit at its early-July meeting. The Fed, which raised short-term interest rates in March to try and slow the economy’s red-hot pace, has been closely watching major economic reports for signs that the economy indeed is weakening.

If the pace picks up, the Fed could be compelled to raise rates again to keep inflationary pressures at bay.

On Thursday, there were two signs of slowing growth: Several of the nation’s biggest retailers reported that sales were sluggish in May; and the number of American workers filing first-time claims for jobless benefits unexpectedly shot up by 19,000. (Story, D3.)

Among Thursday’s highlights:

* Technology issues turned in a solid showing, rebounding after their recent downturn caused by warnings from some key companies about weak near-term profit growth.

Winners included Microsoft, up 1 3/8 to 120 9/16; Dell Computer, up 3 11/16 to 108 7/16, Texas Instruments, up 1/2 to 84 1/4; and Intel, up 41/64 to 143 9/64.

* Among financial stocks, NationsBank jumped 2 1/8 to 61 3/4, Bankers Trust New York gained 1 7/8 to 88 3/8, and Merrill Lynch added 3/4 to 52 3/4.

* Tobacco issues rose on news that foes of the industry are near a compromise on the issue of shielding tobacco companies from punitive damages in lawsuits. Philip Morris rose 1 to 42 3/4, and RJR Nabisco gained 1 1/8 to 31 3/4.

* Energy issues bucked the trend and moved lower on profit taking after recent strong gains. Mobil slid 1 5/8 to 139 1/8, Atlantic Richfield dropped 7/8 to 147 1/4, and Amoco eased 3/8 to 90 3/8.

* Fisher Scientific International surged 7 1/2 to 45 3/8 after the instrument and equipment maker received a recapitalization offer from Trinity I Fund LP.

In currency trading, the dollar fell against the yen after a key Japanese central bank official raised the prospect of higher Japanese interest rates.

The dollar fell to a low of 115.47 Japanese yen, its weakest level against the yen in more than a week, but recovered to settle at 115.72 yen late in New York, versus 116.27 on Wednesday. The dollar was unchanged at 1.729 German marks.

In commodities trading, platinum prices soared on worries about continued tight supplies. (Investor Spotlight, D6.)