THE JOBLESS RATE RISES : Stocks Soar, Bond Yields Tumble : Slowdown: Weak U.S. unemployment report raises hopes that interest rates will not be increased again.

Stocks soared and bond yields tumbled in very heavy trading Friday after a surprisingly weak U.S. jobless report raised hopes that interest rates have peaked.

The Dow Jones industrial average rose 57.87 points to 3,928.64--its biggest advance since climbing 58.55 points last Sept. 15--after having pushed as high as 74 points during the day. The blue chip measure ended the week with a 70.65-point gain.

Bond prices also surged after the Labor Department reported the unexpected jump in the unemployment rate to 5.7% in January from 5.4% in December.

The report signaled to investors that the economy is slowing gradually and “the Fed is not going to have to raise interest rates further,” said Edward P. Nicoski, director of technical analysis at Piper Jaffray Inc. in Minneapolis.

The stock rally extended throughout the broader market, where gainers outpaced losers by more than 3 to 1 on the New York Stock Exchange.

Big Board volume swelled to 441 million shares, the NYSE’s sixth busiest session in history. And the New York Stock Exchange’s volume for the week was a torrid 1.9 billion shares, the highest since 2.3 billion shares changed hands in the week ended Oct. 23, 1987--the week the stock market crashed.

Prices of the Treasury’s 30-year bond, meanwhile, climbed 1 1/4 points, or $12.50 for every $1,000 in face value. The bond’s yield, which falls when prices rise, tumbled to 7.62% from 7.74% late Thursday.

Stock and bond prices broke ahead at the opening bell in response to the Labor Department’s jobless report, which surprised many economists who had been looking for the rate to show little change for January.

The figures fueled hopes that the Federal Reserve’s repeated increases in interest rates are finally slowing the economy’s brisk growth to a more sustainable pace. The economy expanded at a 4% rate in the last quarter, but the central bank and some economists would prefer to see a more modest expansion, around 2.5%, to keep inflation under control.

With the economy growing so rapidly, the Fed has tried to curb the inflation threat by raising short-term rates seven times in the past 12 months, most recently on Wednesday.

Despite Friday’s rally, some analysts remained cautious. They noted that the jobless report represents only one month and is subject to later revision, that upcoming data might counter the perception of a slowing economy and that stock prices already have enjoyed a substantial rebound since early December.

“There’s still come chuckholes in the road” toward a prolonged rally, said Jeffrey B. Logsdon, managing director of Seidler Cos. in Los Angeles.

Steve Shobin, technical analyst at Lehman Bros. in New York, predicted that Friday’s rally will lead to a slight pullback in the days ahead, but only as “a pause that will refresh, and then the market is likely to move higher” to 4,100 by midyear.

The NYSE’s composite index rose 3.26 points to 260.44, while the Standard & Poor’s 500-stock index rose 5.86 to 478.64. The Nasdaq composite index rose 8.42 points to 772.06. At the American Stock Exchange, the market value index rose 3.98 to 442.43.

Among Friday’s U.S. market highlights:

* Prospects for stable lending costs lifted interest-rate sensitive stocks such as banks, insurers and securities brokers. BankAmerica rose 1 1/2 to 45 3/4, NationsBank jumped 2 1/2 to 49 and Morgan Stanley climbed 3 1/8 to 65.

* Several technology issues rallied for the second straight day. Microsoft added 1 1/8 to 60 1/8, Oracle Systems rose 1 1/8 to 44, and Compaq Computer edged up 1/8 to 36 1/8. But Apple Computer fell 1 1/8 to 40 1/2.

* On the active list, Ford Motor added 1/8 to 25 3/4, AT&T; rose 7/8 to 51 1/8, American Express was up 1/2 to 32 1/4 and Philip Morris gained 1/4 to 60 3/4.

Major overseas stock markets were mostly higher.

In Mexico City, the Bolsa index ended a roller-coaster week with a 13.35-point gain, to 1,957.23, as investors continued to monitor U.S. financial rescue plans for Mexico.

In London, the FTSE-100 index rose 25 points to 3059.7, its highest level in more than two weeks, and Frankfurt’s DAX index gained 39.47 points to 2077.94.

In Tokyo, the benchmark Nikkei 225-share index fell 65.33 points to 18,538.97. Stocks were mixed in Seoul, ending a two-day rebound sparked by the government’s announcement of efforts to prop up the market.

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