After briefly plunging early Friday on an unexpectedly sharp jump in joblessness, stocks swung back into positive territory, buoyed by expectations for more rate cuts by the Federal Reserve.

At the end of the day, the Dow Jones industrial average had gained 154.59 points, or 1.43 percent, to end at 10,951.24, after losing as many as 113 points at the open. 

The technology-heavy Nasdaq composite index added 45.38 points, or 2.11 percent, to 2,191.58 after losing more than 60 points in early morning trading.  

The Standard & Poor's 500 index, the market's broadest measure, gained 18.02 points, or 1.44 percent, at 1,266.60.

For the week, the Dow rose 1.3 percent, the Nasdaq improved 5.6 percent and the broad S&P 500 gained 1.1 percent.

``The market is looking forward, and seeing a Fed cut in couple of weeks, perhaps a trough in earnings this quarter and perhaps better business conditions in the second half,'' said Guy Truicko, equity portfolio manager at Unity Management, which oversees $1 billion. ``That's what the market is going to continue to focus on -- the end-game.'' 

Stocks initially fell after the Labor Department reported the economy lost jobs in April at the fastest pace in a decade, raising concerns that growing joblessness will cause Americans to pull back on the spending that helped power 10 years of expansion. 

The government reported a big drop of 223,000 in nonfarm payrolls -- compared to expectations for a gain of 5,000 jobs. It was the steepest drop since February 1991, just before the last recession ended in March of that year. 

The report also showed unemployment rose to 4.5 percent, its highest level since October 1998, while average hourly earnings climbed 0.4 percent.

The report — which is watched closely because it is a harbinger of consumer spending, the main engine of economic growth — followed Thursday's report that jobless claims were at a 5-year high.

But stocks recovered on optimism that lower interest rates can help turn the economy around.

High-tech heavyweights like Cisco Systems, up 73 cents at $19.39, reversed course and headed higher. 

The oil sector rose following a jump in crude oil prices on speculation of strong gasoline prices this summer. Oil giant and Dow component Exxon Mobil rose $1.30 to $87.40. The American Stock Exchange's Oil Index rose 1.76 percent. 

Among individual issues, software maker BEA Systems Inc. fell 9.7 percent, or $3.88, to $35.98, after Deutsche Banc Alex Brown analyst Jim Moore issued a cautious outlook on the company past the first quarter. 

Moore said he was concerned that several factors may hurt the company's high share price valuation. ``Valuation is still our major concern, and we urge investors to be selective in timing,'' Moore wrote in a research note.

While the jobs report was worrisome, it also fueled expectations that the Fed will need to cut interest rates aggressively to spur growth, which will be good for stocks and corporate earnings in the long run, analysts said. 

``The economy is worrisome in general because you never know how quickly interest rates can right the ship, but I don't see anything that came out today that should be extremely unexpected,'' considering the rash of corporate jobs cuts seen recently said Rick Meckler, a senior managing director at investment firm Liberty view, which oversees $1 billion. 

The Fed, which has lowered interest rates by two percentage points so far this year, meets next on May 15 to take another look at its money policy. 

In other economic news, Chicago Federal Reserve President Michael Moskow said that uncertainty surrounds the outlook for the rest of 2001 but he thinks the economy will likely rebound gradually later in the year.

Overseas markets were mostly down on Friday. In afternoon trading in Europe, Germany's DAX index was off 1.07 percent at 6024.26, France's CAC-40 was down 1.2 percent at 5391.71, and Britain's FT-SE 100 was up .35 percent at 5785.90. 

Japan's markets were closed Friday.