NEW YORK -- The NASDAQ composite index rose to a new record Friday, capping a week of powerful gains as investors moved money from industrial companies that may be hurt by rising interest rates to technology companies.
The NASDAQ rose 33.16 to 4,244.14, above its previous record of 4,235.40, set Jan. 21. The technology-dominated index rose 357.07 points for the week, or 9.2 percent, its best weekly performance since 1974.The Dow Jones industrial average fell 49.64 to 10,963.80, sinking under weakness in financial shares. For the week, the Dow rose 224.93 points, or 2.1 percent.
The Standard & Poor's 500 fell 0.60 to 1,424.37 and the Russell 2000 index of smaller companies rose 3.89 to 525.52.
"Money continues to shift from the real world to the virtual world," said Scott Bleier, chief investment strategist at Prime Charter Ltd. in New York. "Money managers are going to the stocks that they know will perform."
Investors poured money into shares of NASDAQ's largest stocks, including Microsoft, up 2 15/16 to 106 9/16; Cisco Systems, up 3 5/16 to 121 1/8; and Apple Computer, up 4 11/16 to 108.
But smaller, younger companies that are just beginning to capitalize on the technology craze drew attention as well. Firepond, a maker of software that helps companies manage their electronic-commerce businesses, soared in its initial public offering of stock. Shares were offered at 22, opened at 52 and closed at 100 1/4.
"It takes a lot of equipment and labor to build the Internet, not just ideas," Bleier said. "The companies that are figuring out how to improve the Internet are going to do very well."
The broader market proved more vulnerable after the government delivered the latest indication that the economy is growing quickly enough to convince the Federal Reserve to continue raising interest rates in its effort to keep inflation at bay.
The Labor Department said employers added 387,000 jobs in January, pushing the unemployment rate down to 4 percent, its lowest level since 1970. Still, some economists had expected the jobless rate to tumble below 4 percent, and investors drew some confidence when it did not, traders said.
Average hourly earnings, a key gauge of inflation pressures, rose a slightly higher-than-expected 0.4 percent to $13.50 in January, the fastest pace since September.
Financial services stocks, which are most sensitive to inflation and interest rates, faltered. J.P. Morgan fell 35/8 to 1191/8, contributing most to the Dow's loss.
Still, analysts said investors apparently have faith that the Federal Reserve is in control of inflation. The central bank on Wednesday increased rates for the fourth time since June, and indicated more increases may be on the way.
"I think the steady hand by the Fed is helping fuel the rally," said Barry Berman, head trader for Robert W. Baird & Co.
Vodafone Airtouch AG was an exception to the strength in technology shares, falling 3 15/16 to 57 13/16 after the company sweetened its bid for German wireless company Mannesmann AG. Mannesmann shareholders will vote by Feb. 17 on whether to accept Vodafone's offer, now valued at $180 billion.
Mattel shares fell 1/8 to 10 3/4 on the New York Stock Exchange a day after Chief Executive Officer Jill Barad resigned. The toymaker reported a steep loss for the fourth quarter, disappointing Wall Street analysts for the third time in the past four quarters.
Declining issues outnumbered advancers by a 5-to-4 margin on the New York Stock Exchange. On the NASDAQ, 10 stocks rose for every nine that fell.
NYSE composite volume totaled 1.28 billion shares, compared with 1.35 billion in the previous session.
Overseas, Japan's Nikkei stock average fell 0.1 percent. Germany's Xetra DAX index rose 1.2 percent, Britain's FT-SE 100 fell 1.6 percent, and France's CAC-40 rose 2.1 percent.