SAN FRANCISCO -- You say tomato, I say to-MAH-toe. You say potato, I (and

Dan Quayle

) say po-TAH-toe.

There were (at least) two ways to interpret the

employment report

today, and stock and bond traders used them both.

On the bullish hand, the

Labor Department

reported nonfarm payrolls rose just 11,000 in May, far below the 216,000 expected. On the bearish hand, the unemployment rate fell to 4.2%, below the 4.3% expectation, and average hourly earnings rose by 0.4%, above the 0.3% target. As is often the case, equity traders chose to accentuate the positive, showering particular favor on tech and drug stocks, while bond traders took a more dour view.

"People were looking for disaster and it didn't happen," Scott Bleier, chief investment strategist at

Prime Charter

, said of the jobs data. "Wednesday morning

stocks started to go up quietly and they have not stopped. This morning, a downtrend dating back from mid-May was broken. That forced shorts to cover and that in turn forced some institutions waiting for weakness to step in and buy. There's not a whole helluva lot of volume but this is a damned good day, and we haven't had one in seemingly since mid-May."

The

Dow Jones Industrial Average

rose 136.15, or 1.3%, to 10,799.84 while the

S&P 500

gained 28.21, or 2.2%, to 1327.75. The

Nasdaq Composite Index

rose 75.02, or 3.1%, to 2478.34 while

TheStreet.com Internet Sector

index gained 19.16, or 3.6%, to 553.46.

The majority of traditional tech bellwethers rose, led by chip and equipment makers such as

Intel

(INTC) - Get Report

and

Applied Materials

(AMAT) - Get Report

. The

Philadelphia Stock Exchange Semiconductor Index

rose 5.7%, outpacing the solid 3.9% rise for the

Nasdaq 100

.

America Online

(AOL)

led Net favorites, surging 11.6% after a federal judge in Portland denied

AT&T's

(T) - Get Report

ability to deny other ISPs access to its cable lines. Ma Bell fell 1.6% while its partially owned

@Home

(ATHM) - Get Report

tumbled 10.2%.

"It's an excuse," Bleier said of the ruling and AOL's rise, noting AT&T will appeal but ultimately will have to let others use their lines. "This was an opportune time.

Internet stocks were groping for a bottom. Needless to say, they're below where they were, but it looks like much of the selling is done for now. The fact is they looked like they've put in a decent bottom."

Among secondary Net names,

Beyond.com

(BYND) - Get Report

gained 26.9% upon receiving a $120 million contract from the

Internal Revenue Service

.

PSINet

(PSIX)

climbed 13.8% after

Donaldson Lufkin & Jenrette

reiterated the ISP as its top pick.

Among new Net offerings, venture capital firm

WitCapital

(WITC:Nasdaq) rose 64.6% and

High Speed Access

(HSAC:Nasdaq) rose 56.7% from respective IPO levels, but

Network Access Solutions

(NASC:Nasdaq) rose just 1/16 from its IPO price of 12.

Beyond tech, pharmaceuticals and medical device-makers were the session's big winners.

Among big pharmas,

Pfizer

(PFE) - Get Report

rose 6.4% ahead of a 3-for-1 stock split and

Eli Lilly

(LLY) - Get Report

gained 4.6% after adding $500 million to an existing stock buyback plan. The

American Stock Exchange Pharmaceutical Index

rose 3.4%.

Meanwhile,

Visx

(VISX)

surged 31.4% after a

Federal Trade Commission

judge dismissed a government antitrust case against the company. Separately, the maker of vision-correction lasers was tapped to join the Nasdaq 100 as of June 10.

In

New York Stock Exchange

trading, 696.4 million shares were traded while advancers led declining issues 1,823 to 1,097. In

Nasdaq Stock Market

activity, 890.1 million shares were exchanged while gainers led 2,240 to 1,686. New 52-week highs led news lows 65 to 46 in NYSE trading and by 86 to 46 over-the-counter trading.

For one day (at least), traders ignored news the Chinese will tighten controls over foreign trading in the yuan. The Chinese deny a devaluation is in the offing, but tighter controls could portend such a move.

"It's not in the

stock market's consciousness but a lot of pros in the business -- the people who trade currencies -- know it's a foregone conclusion China has to devalue," Bleier said. "If it happened now, the market is a load better than the fourth quarter of last year."

In a "worst-case scenario," the Dow could pull back to the mid-9000s and "maybe a devaluation by China will be a reason to take us there," the strategist said. "But near-term, we've put in a bottom. This is a day the downtrend in the S&P was broken at about 1307. Until we get a better picture of what the Fed may do and of earnings preannouncements, it appears we have found a bottom near-term."

Cautious Optimism From Held

Underscoring the positive bent of trading today, Mitchell Held, managing director in economic research at

Salomon Smith Barney

, upped his earnings estimates on the S&P 500 to $47.75 from $46.50 for 1999 and to $49.50 from $47.90 for 2000.

"While we expect wages and salaries to ultimately resume their upward path, our new forecast also assumes a stronger outlook for productivity growth and somewhat weaker unit labor costs than we had previously projected," Mitchell wrote in a research report.

Today's report "kept things pretty much as they are," the economist said when asked how that jibes with the jobs data. "What's been interesting, almost inexplicable, is the deceleration of wage gains in the last year. This morning hinted at least the deceleration has stopped. It's maybe the first indication we might be getting some

increase but that's pushing it."

If labor costs are rising, it would be "prudent" for the Fed to take "cautionary steps" and will tighten if

retail sales

data next Friday prove strong and

CPI

on June 16 are "not mushy," Held predicted.

Despite the prospect of a Fed tightening, Held raised his earnings estimates because "growth is proving stronger than we expected" although S&P 500 earnings will still "significantly" trail the 15% annualized earnings growth produced from 1992 to 1997.

Among other indices, the

Russell 2000

rose 6.35, or 1.5%, to 442.33; the

Dow Jones Transportation Average

rose 41.77, or 1.2%, to 3462.73; the

Dow Utility Average

gained 4.25, or 1.3%, to 330.72; and the

American Stock Exchange Composite Index

climbed 5.04, or 0.7%, to 780.98.

For the holiday-shortened week, the Dow industrials rose 240.10, or 2.3%; the S&P 500 gained 25.91, or 2%; the Comp edged up 7.82, or 0.3%; the Russell 2000 added 3.65, or 0.8%; but the DOT fell 27.18, or 4.7%. Additionally, the Dow transports rose 47.03, or 1.4%,; the Dow utilities added 1.52, or 0.5%; and the Amex Composite rose 2.24, or 0.3%.

The price of the 30-year Treasury bond fell 9/32 to 90 3/32, its yield rising to 5.97%.

Elsewhere in North American equities today, the

Toronto Stock Exchange 300

rose 53.09, or 0.8%, to 6940.14 and the

Mexican Stock Exchange IPC Index

added 7.64, or 0.1%, to 5371.26. For the week, the TSE 300 climbed 137.44, or 2% and the IPC slid 52.31, or 1%.

Friday's Company Report

By Heather Moore
Staff Reporter

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Wit Capital soared 5 13/16, or 64.6%, to 14 7/8 after

Bear Stearns

priced its 7.6 million-share IPO top-range at $9 a share last night. (

TheStreet.com

wrote about the Internet investment banking and brokerage firm's offering this morning.)

Elsewhere in new issues:

  • High Speed Access jumped 7 3/8, or 56.7%, to 20 3/8 after Lehman Brothers priced its 13-million-share IPO top-range at $13 a share. High Speed Access provides Internet access via cable modem.
  • Network Access Solutions picked up 1/16 to 12 1/16 at after Donaldson Lufkin & Jenrette priced its 7.5-million-share IPO below-range at $12. The price range for the data communications company's offering was $14 to $16.
  • Online Resources & Communications (ORCC:Nasdaq), an e-commerce software firm, also added 1/16 after J.P. Morgan priced its 3.1 million-share IPO top-range at $14 a share.

As noted above, a federal judge in Oregon ruled that AT&T cannot exclude competing Internet Service Providers from its cable systems -- upholding the right of cable regulators in Portland and the surrounding Multnomah County to condition their approval of the merger between AT&T and the former

Tele-Communications

on an open-access requirement. Telephone lost 7/8 to 53 3/8. AOL benefited, rising 12 1/4, or 11.6%, to 118.

Mindspring

(MSPG)

shot up 13 11/16, or 21%, to 79 5/16 and

Earthlink

(ELNK)

shot up 7 7/8, or 15.5%, to 59. By contrast, @Home tumbled 10 3/4, or 10.2%, to 94 1/2.

Mergers, acquisitions and joint ventures

Honeywell

(HON) - Get Report

starred in the role of Friday's rumored takeover target and popped up 9 1/8, or 9.5%, to an all-time high of 105.

CNBC

said a possible acquirer is

AlliedSignal

(ALD)

, which lowered 2 to 58 3/8.

Earnings/revenue reports and previews

AEP Industries

(AEPI)

skidded 2 5/16, or 6.4%, to 35 1/8 after late yesterday reporting second-quarter operating earnings of 28 cents a share, missing the single-analyst estimate for 32 cents but moving ahead of the year-ago 16 cents. Today, the company filed for a 2.4 million-share offering. That stock represents

Borden's

33% interest in AEP.

Beyond.com climbed 4 11/16, or 26.9%, to 22 1/4 after

Credit Suisse First Boston

said it estimates the company will lose $3.88 a share in 1999, better than its previous estimate of a loss of $3.90. For fiscal 2000, the firm expects the company to lose $1.54, narrower than a previous estimate for a $1.61 loss.

Guitar Center

(GTRC)

sank 4 3/16, or 27.8%, to an all-time low of 10 15/16 after saying its merger with

Musician's Friend

would dilute earnings in the final three quarters of fiscal 1999 by about 8 cents a share and that current business trends would lower earnings by an additional 2 cents.

PaineWebber

slashed the stock to neutral from buy.

Haverty Furniture

(HVT) - Get Report

vaulted 3 1/2, or 12.4%, to an all-time high of 31 11/16 after last night saying its May same-store sales jumped 15.3%.

Michaels Stores

(MIKE)

hopped up 2 1/4, or 7.9%, to 30 3/4 after last night posting first-quarter earnings of 18 cents a share, 3 cents above the 11-analyst estimate and a repeat of the year-ago figure.

Nu Skin Enterprises

(NUS) - Get Report

slipped 1/16 to 17 13/16 after warning that "unanticipated delays in significant marketing initiatives in Japan" will likely lead to softer-than-anticipated second-quarter earnings, up to 10% lower than the current two-analyst estimate for 35 cents a share. The company also said a pending public offering of shares by existing stockholders was postponed.

Quantum

(QNTM)

declined 5/8 to 19 after last night saying it sees first-quarter earnings of 5 cents to 15 cents a share, citing aggressive pricing in the desktop hard-drive market. The 11-analyst forecast called for 31 cents vs. the year-ago 2 cents. The company also sees first-quarter revenue coming in below the fourth quarter's. Today,

Prudential Securities

cut its first-quarter earnings estimate to 10 cents from 32 cents.

Tommy Hilfiger

(TOM)

gave up 1 7/8 to 72 7/8, off a high of 78 1/2, despite posting fourth-quarter earnings of 97 cents a share, blowing past the 13-analyst estimate of 90 cents and the year-ago 52 cents. The clothing retailer also set a 2-for-1 stock split.

Offerings and stock actions

Eli Lilly tacked on 3 5/16 to 75 1/4 after announcing a repurchase of up to $500 million in its stock, adding to a $1 billion program from January. Lilly also said it expected earnings growth to slow immediately after generic competition emerges in 2004 for

Prozac

.

Exchange Applications

(EXAP)

slid 2 9/16, or 10.1%, to 23 after completing a secondary offering of 3 million shares at 22 apiece.

Analyst actions

Check Point Software Technologies

(CHKP) - Get Report

expanded 5 3/16, or 11.8%, to 49 after

ING Barings

raised it to buy from hold. Yesterday, the company told analysts it exceeded its own "internal business plan" by more than 20% during the first five months of 1999.

Echostar Communications

(DISH) - Get Report

grew 8, or 6.8%, to an all-time high of 126 after

Goldman Sachs

set a year 2000 price target for the stock at 150.

Goldman Sachs

(GS) - Get Report

rose 1 3/4 to 65 3/8 after DLJ started coverage with a buy.

Sprint PCS

(PCS)

flew 3 3/16, or 6.9%, to 49 3/8 after DLJ pushed up the stock to top pick from buy.

T. Rowe Price Associates

(TROW) - Get Report

slouched 1 1/8 to 36 27/32 after

Morgan Stanley Dean Witter

dropped it to neutral from outperform.

Viacom

(VIA) - Get Report

excelled 2 1/4, or 5.9%, to 40 11/16 after Lehman Brothers raised it to buy from outperform, with a price target of 50.

Miscellany

Amazon.com

(AMZN) - Get Report

, which faces threats of legal action from

The New York Times

, advanced 3 3/8 to 108 7/16 after asking a federal court in Seattle to allow it to continue advertising and selling

New York Times

bestsellers at a 50% discount. A week after the online bookseller began offering the discount,

The Times

, the flagship of

New York Times Co.

(NYT) - Get Report

, sent Amazon a letter saying it was infringing on the newspaper's copyright and trademark by using the list. New York Times added 1 1/16 to 35.

Cabletron Systems

(CS) - Get Report

increased 1/8 to 13 15/16 after naming Piyush Patel president, CEO and chairman. Patel has led the company's research and development team as senior vice president of worldwide engineering. He succeeds Craig R. Benson.

MCI WorldCom

(WCOM)

surged 2 13/16 to 89 3/4 despite news of a shareholder lawsuit charging the company with violating

Securities and Exchange Commission

laws by allegedly misleading investors when it denied plans to acquire

Skytel Communications

(SKYT)

. Skytel added 5/8 to 21 3/8.

Procter & Gamble

(PG) - Get Report

rallied 3 1/8 to 96 5/8 after

The New York Times

said the company is expected next week to announce to cut thousands of jobs worldwide, close some underperforming plants and take a sizable charge in an effort to become more competitive.

Visx rocketed 17 3/16, or 31.4%, to an all-time high of 71 7/8 after saying a

Federal Trade Commission

judge dismissed an FTC complaint related to the company's laser vision correction patents. The federal agency alleged Visx and a doctor committed fraud by failing to tell the

Patent Office

about discoveries.