U.S. stocks' rebound continued for a second session on Friday, with the broad market finishing higher despite a mixed showing by key indexes.
Smaller stocks, beaten down severely in recent weeks, led the charge.
But the market's strong midday gains faded sharply in afternoon.
On Wall Street the Dow Jones industrial average closed out a wild week with gain of 20.34 points to 8,598.02.
The Dow had been up as much as 112 points before falling back.
The Russell 2,000 index of smaller stocks surged 9.18 points, or 2.3%, to 415.80, after gaining 2% on Thursday.
The market's breadth improved dramatically, as winners topped losers by 2 to 1 on the New York Stock Exchange and by 26 to 15 on Nasdaq.
Analysts said the moderate July employment report buoyed the bond market and thus helped stocks. The yield on the 30-year Treasury bond, a benchmark for long-term rates in general, fell to a one-month low of 5.62% from 5.67% on Thursday.
Stocks also managed to rebound in the face of troubling news worldwide: the U.S. embassy bombings in Africa; Vietnam's currency devaluation; another dive in Asian stocks; a steep plunge in Mexican stocks; and the dollar's latest surge.
Many investors seemed intent on bargain hunting in the trampled smaller-stock sector.
Investors are seeing "the revenge of the mid-cap and small-caps," said Michelle Clayman, chief investment officer at New Amsterdam Partners, which manages assets of $652 million.
The Russell 2,000 index by Wednesday was off nearly 20% from its record high set in April.
For the week the Russell had a loss of 0.9%. The Dow's loss for the week was 3.2%, most of which came on Tuesday when the index sank 299 points on worries about slowing corporate earnings growth, Asia's woes and President Clinton's legal troubles.
The Nasdaq composite gained 17.26 points, or 0.9%, to 1,846.77 on Friday, and lost 1.4% for the week.
Can stocks continue to climb? Money manager Robert Doll was among the buyers of oil service, computer and financial stocks this week. He had 38% of his $2.3 billion Oppenheimer Growth Fund in cash at the end of last week because he couldn't find companies with good earnings prospects at low prices. His cash position is down to about 34% now.
"I'm having less trouble than I did [finding stocks to buy], but more trouble than I'd like, which tells me maybe we haven't finished going down," he said.
Asia remains a key worry, with the threat of currency devaluation by China seeming to grow.
Among Friday's highlights:
* Internet stocks led Nasdaq's gains. Yahoo rose $4.25 to $91.63, Broadcast.com soared $7.19 to $63.69 and Excite jumped $4.06 to $45.94.
* Semiconductor issues also were strong, with AMD up $1.25 at $18 and Texas Instruments up $1.81 at $63.19.
* Some small-stock winners included K Swiss, up $1.50 at $24.63; IHOP, up $2.25 at $41.88; and Agribiotech, up $1.69 at $20.06.
* Among beaten-down blue chips, Boeing soared $2.19 to $39.25 and Alcoa rose $1.63 to $66.75. But some recent favorite blue chips eased, including GE, down 69 cents to $88.13, and Coca-Cola, off $1.19 to $80.44.
* Electronic Data Systems leaped $5.13 to $41.81 after Chief Executive Les Alberthal resigned. EDS missed earnings estimates in four of the last seven quarters as revenue from major customers slid.
* Strong sectors included energy, real estate investment trusts and drugs, while food stocks were weak and bank stocks were mixed.
In currency trading, the dollar soared against the Japanese yen but pulled back from record highs against the Canadian dollar after aggressive market intervention by the Bank of Canada.
The Canadian dollar rose to 65.83 U.S. cents, recovering from an all-time low 65.15 U.S. cents.
Market Roundup, D4