DOW HITS RECORD HIGH.

Byline: Deborah Stern and Phil Serafino Bloomberg News

U.S. stocks rose, sending the Dow Jones Industrial Average to its first record since May 13, after a government report on job growth and wages reinforced investor optimism for growing corporate profits.

It was the best week for stocks since October 1998, even after the central bank raised interest rates for the first time since March 1997 and the economy added more jobs than expected.

``We think earnings are going to be very strong in the second quarter,'' said Philip Orlando, chief investment officer for Value Line Asset Management, which oversees $6 billion. ``We got exactly what we were hoping for out of the Fed on Wednesday, and (Friday) morning's data didn't deter us from a summer rally.''

The Dow average rose for a sixth day, gaining 72.82, or 0.7 percent, to 11,139.24. The Standard & Poor's 500 Index advanced 10.26, or 0.7 percent, to 1,391.22 and the Nasdaq Composite Index climbed 34.84, or 1.3 percent, to 2,741.02, both setting their third straight records.

All three major indexes had their biggest weekly point gains ever. The Dow added 586 points, or 5.3 percent. The S&P 500 gained 75.91, or 5.8 percent, and the Nasdaq soared 188.37 points, or 7.4 percent. In percentage terms, it was the Nasdaq's seventh-biggest gain ever, though it wasn't in the top 10 for the Dow or S&P 500.

``We felt we'd see a summer rally in stocks up to 11,500 on the Dow, so we're more than halfway home,'' Orlando said. ``Anyone predicting a summer correction is looking for another job.''

Four stocks rose for every three that fell on the New York Stock Exchange, where volume was light before the long Independence Day weekend. The market will be closed Monday. Some 584 million shares changed hands, below the three-month daily average of 793 million.

Communications-equipment stocks contributed most to the S&P 500's gains, continuing last month's recovery. Cisco Systems, Lucent Technologies Inc. and Tellabs Inc. led the charge.

``The outlook for data-network infrastructure has continued to be the one predictable bright spot in technology,'' said Craig Ellis, manager of the $75 million Orbitex InfoTech and Communications Fund. ``Cisco will do well this year, next year and the year beyond.''

American Express contributed most to the Dow average's advance and other financial companies rose as well.

``Anticipated stable rates through the summer months have a positive influence'' on financial stocks, said Frank Barkocy, a principal in Keefe Managers Inc., which oversees about $500 million in financial stocks. ``Second-quarter earnings expectations are strong and that's generating interest.''

The Labor Department said the economy added 268,000 jobs in June, and the unemployment rate rose to 4.3 percent from 4.2 percent in May. Economists surveyed by Bloomberg News forecast 217,000 new jobs and a jobless rate of 4.2 percent.

Average hourly earnings rose 0.4 percent in June, vs. expectations of an 0.3 percent increase. Labor costs account for two-thirds of consumer prices, so Fed policy-makers watch them in their deliberations on inflation and interest rates.

The report did little to change investor expectations that the Federal Reserve will raise interest rates later this year to cool the economy and keep inflation in check. The Fed raised rates a quarter-point Wednesday but said it was inclined not to raise them again soon unless inflation accelerates.

``This is good news for the stock market - we have low unemployment and low inflation, '' said Peter Canelo, U.S. investment strategist at Morgan Stanley Dean Witter & Co.