Blue-chip stocks eked out slight gains Friday amid renewed hopes for a recovery, but the Nasdaq finished lower on near record volume as investors took profits from a rally started by the news of Oracle Corp. (ORCL)'s proposed takeover of software rival PeopleSoft Inc. (PSFT)

The blue-chip Dow Jones industrial average (search) rose 21.49 points or 0.24 percent to finish at 9,062.79, after hitting a session high of 9,215.88. The Standard & Poor's 500 index (search) fell 2.38 points, or 0.24 percent, to 987.76, after earlier rising above 1,000 for the first time in about a year. The tech-driven Nasdaq Composite Index (search) closed down 18.59 points, or 1.13 percent, at 1,627.42, based on the latest data.

But all three major stock indexes still managed to end the week higher -- for the second consecutive week of gains. For the week, Dow rose 2.4 percent, the S&P 500 gained 2.51 percent and the Nasdaq advanced 1.97 percent.

"There's a lot of profit-taking going on. The S&P broke 1,000 for the first time in a long time and on Nasdaq, you had a huge run this morning," said James Park, senior vice president and trader at Brean Murray.

"The most critical piece of news ... is Oracle's bid for PeopleSoft," said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access. "That means Oracle is confident about the economy going forward, and they think earnings are going to hold up."

A government report showing U.S. payrolls lost only 17,000 jobs in May, sharply below expectations, also helped investors' sentiment as the data hinted of improving conditions in the weak labor market. That report, however, showed the U.S. unemployment rate rose in May to 6.1 percent, the highest since July 1994, from April's 6 percent. But this was in line with Wall Street's expectations.

"On balance, the numbers are very good, very encouraging," said Hugh Johnson, chief investment officer at First Albany Corp. "At first glance it looks like they're in line with expectations. The nonfarm payrolls, the most important part of the release, declined 17,000 versus expectations of 25,000."

The downturn of the Nasdaq and the S&P 500 plus the Dow's trimmed sails represented "normal profit-taking ahead of the weekend," said Tim Heekin, director of trading at Thomas Weisel Partners.

Since hitting their 2003 lows on March 11, the Dow has risen about 20 percent, the S&P 500 has added about 23 percent, and the Nasdaq has gained about 28 percent.

"The correction which has been in the cards for the last number of days has finally gotten under way, with investors using the weekend as an excuse to take some money off the table," said John Simon of TradeSignals.com.

Trading was heavy, with more than 1.83 billion shares traded on the Big Board and 2.95 billion changing hands on Nasdaq, a record for the year and the fourth-largest daily volume in Nasdaq's history.

Tech stocks got a boost earlier from the soaring shares of PeopleSoft, up almost 18 percent, after Oracle, the world's No. 2 software maker, offered to buy PeopleSoft for $5.1 billion. PeopleSoft shares, the most active on Nasdaq, jumped $2.71 to $17.82, while Oracle's fell 27 cents or 2 percent to $13.09.

Among other companies said to be takeover targets, Sun Microsystems (SUNW), was the third most active issue on Nasdaq and surged 5.7 percent or 28 cents to $5.20.

"I suspect that a lot of investors thought this might be the start of new M&A activity," said Angel Mata, managing director of listed equity trading at Legg Mason Wood Walker.

Intel (INTC) ended 8 cents lower at $21.76, after earlier rising as high as $22.919 and lifting semiconductor stocks. On Thursday, after the close, Intel narrowed the range of its expected second-quarter revenue and left the midpoint of its previous forecast unchanged, reflecting stronger chip demand.

Helping the Dow, McDonald's Corp.  (MCD) surged 9 percent or $1.78 to $21.06. The fast-food company said comparable sales at its hamburger restaurants rose 2.2 percent in May, reversing 14 consecutive months of declines.

Advancing issues almost matched decliners by 1,641 to 1,653 on the New York Stock Exchange. But on Nasdaq, losers outpaced winners by 1,750 to 1,480.

The Russell 2000 index, the barometer of smaller company stocks, fell 2.75, or 0.6 percent, to 453.94.

Overseas, Japan's Nikkei stock average finished Friday up 1.5 percent. In Europe, France's CAC-40 climbed 2 percent, Britain's FTSE 100 rose 1.1 percent and Germany's DAX index soared 2.9 percent.

Reuters and the Associated Press contributed to this report.