Updated from 1:11 p.m. EDT

Stocks staged a fierce rally Friday as investors looked past lackluster June employment numbers and celebrated a terrorism-free Fourth of July. While the buying came in a shortened post-holiday session during which many traders were out of the market, volume was relatively active, topping 700 million shares on the NYSE and 1.1 billion on the Nasdaq in 3 1/2 hours of trading.

The

Dow Jones Industrial Average

closed up 325 points, or 3.6%, to 9380 while the

Nasdaq

added 68 points, or 4.9%, to 1449. The

S&P 500

rose 35 points, or 3.7%, to 989. Advancing issues beat decliners on the NYSE by a 5-1 margin.

The charge higher was led by technology, with the Philadelphia Semiconductor Index adding 9% and the Nasdaq's computer and telecommunications proxies each adding about 6%. The AMEX networking index gained 7.9% and the Nasdaq biotech index added 4.5%. Precious metals shares fell.

The Labor Department said nonfarm payrolls rose by 36,000 in July, below the consensus of 75,000, while the unemployment rate rose from 5.8% to 5.9%, in line with expectations. The average workweek rose slightly to 34.3 hours in what some consider a harbinger of hiring.

European markets closed higher for a second straight session, with London's FTSE 100 gaining 3.3% to 4617 and Germany's Xetra DAX adding 4.3% to 4441. In Asia, Japan's Nikkei closed up 193, or 1.8%, to 10,826 while Hong Kong's Hang Seng rose 41 points, or 0.4%, to 10,806.

Vivendi

(V) - Get Report

moved higher after new management predicted the media conglomerate faced a $2.65 billion cash shortfall by year's end. There is some speculation, however, that the company's newly named chairman, Jean-Rene Fourtou, will find enough allies in the French banking system to stave off crisis. The stock closed up 10.3% to $17.27.

Elsewhere,

Qwest

(Q)

said if there's a Justice Department criminal probe going on, it hasn't heard about it. Qwest said it had no knowledge of such an investigation, which was reported without much elaboration by

The Wall Street Journal

Friday. Despite the story, Qwest shares rose 8.8% to $1.85.

Two software makers predicted worse-than-expected quarterly numbers.

webMethods

(WEBM)

guided its first-quarter lower in the face of "muted" demand. The company now expects revenue of $47 million to $48 million and a pro forma loss of 3 cents to 5 cents a share. Analysts had been calling for revenue of about $50 million and a pro forma break-even. Despite the warning the shares were taking part in the Nasdaq rally, adding 2.7% to $8.35.

Meanwhile,

JDA Software

(JDAS)

expects second-quarter revenue of $57 million and earnings of 17 cents to 18 cents a share. Analysts were expecting revenue of $61.3 million and earnings of 21 cents. The shares sold off, down 44% to $15.10.

The 10-year Treasury note was recently losing 24/32 to yield 4.86%.