updated 5/9/2005 9:14:48 AM ET 2005-05-09T13:14:48

Wall Street limped to a mixed finish Friday as a surprisingly strong employment report raised fears that a surge in economic growth could spark inflation and prompt the Federal Reserve to aggressively raise interest rates. The major indexes finished the week higher.

Major Market Indices

The economy created 274,000 jobs in April , far more than the 175,000 Wall Street expected. With job gains for February and March revised upward, investors felt far more confident in the strength of the job market and economic growth.

However, with more money in the market and higher demand, the newly employed could force prices higher. That intensified Wall Street’s inflation fears, which had receded somewhat as questions arose about the health of the economy in March and April.

“Today’s report comes in, it surprises to the upside, and now the thought isn’t about an economic soft patch. Now, we’re thinking about interest rates, and that puts the Federal Reserve back in play,” said Jay Suskind, head trader at Ryan Beck & Co. “We’ve got oil higher, and we’re fearful of the Fed dampening the party. So you got good news today, but it comes with drawbacks.”

The Dow Jones industrial average rose 5.02, or 0.05 percent, to 10,345.40, after being up as much as 57 points in morning trading.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 1.28, or 0.11 percent, at 1,171.35, and the Nasdaq composite index gained 5.55, or 0.28 percent, to 1,967.35.

While posting solid gains for the week, the market’s uncertain reaction to good news — a reassuring statement on interest rates from the Fed on Tuesday and the jobs report Friday — kept stocks from staging a major rally. For the week, the Dow gained 1.5 percent, the S&P rose 1.25 percent and the Nasdaq picked up 2.38 percent.

Bond prices tumbled Friday as investors grew more concerned about interest rates. The yield on the 10-year Treasury note rose to 4.26 percent from 4.16 percent late Thursday. The dollar was up against most major currencies, while gold prices fell.

Crude oil futures were volatile as speculators tried to figure out whether the jobs report would impact oil prices. A barrel of light crude settled at $50.96 , up 13 cents, on the New York Mercantile Exchange after vacillating through the session.

Energy prices weighed heavily on consumers last month, according to the latest AP-Ipsos consumer confidence index. The index came in at 78.2 in May, a sharp drop from April’s 84.5 reading. It was the lowest index reading since October 2003.

Given higher-than-average oil prices and their uncertain effect on the economy, it would take an unusually deft Federal Reserve to manage interest rates so that inflation remains under control while ensuring steady economic growth.

“What scares folks about the jobs number is that it implies much stronger economic growth.” said John Waterman, chief investment officer at Rittenhouse Asset Management Inc. “The stronger the growth is, the longer and harder the Fed’s going to have to raise rates, and the risk is they’re going to step on the brakes too hard and hurt growth.”

In company news, investors took little solace from General Electric Co.’s announcement that it will restate results from 2001 through the first quarter of this year to reflect increased earnings. The industrial, finance and media conglomerate also boosted its profit forecasts for the current quarter. Shares of GE were unchanged at $35.85.

Fellow Dow component Intel Corp. added 23 cents to $24.49 after the semiconductor maker, at an analyst meeting late Thursday, promised double-digit revenue growth for 2005. The company also promised a new branding campaign later this year.

Pixar Animation Studios Inc. more than tripled its earnings thanks to sales of “The Incredibles” on DVD. The company’s profits blew past analysts’ forecasts by 20 cents per share. Shares of Pixar climbed $2.43 to $48.70.

Cosmetics maker Revlon Inc. tumbled 10.3 percent, or 33 cents, to $2.89 after the company’s quarterly loss narrowed from a year ago, but missed Wall Street’s expectations by 6 per share. The company’s revenues also fell year-over-year.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where preliminary consolidated volume came to 1.73 billion shares, compared with 2.05 billion traded on Thursday.

The Russell 2000 index of smaller companies was up 0.88, or 0.15 percent, at 596.52.

Overseas, Japan’s Nikkei stock average surged 1.73 percent. In Europe, Britain’s FTSE 100 closed up 0.34 percent, France’s CAC-40 climbed 0.35 percent for the session, and Germany’s DAX index rose 0.27 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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