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Wall Street Booms On Economic News

A report of weak job growth eased fears of inflation and interest rate hikes and boosted Wall Street on Friday, CBS News Correspondent Anthony Mason reports.

The nation's unemployment ticked up to 4.1 percent in February but still remained at a 30-year low as 43,000 workers found jobs, the fewest in nine months.

Last month's jobless figure, reported Friday by the Labor Department, followed January's 4 percent rate, the lowest since 3.9 percent in January 1970. Many analysts had expected February's unemployment rate to hold steady.

Afraid record job growth could spark inflation, Federal Reserve Board chairman Alan Greenspan has threatened to raise interest rates to cool the economy down.

While the Fed is still expected to raise rates later in March -- the fifth hike in eight months -- markets welcomed Friday's job report as a sign that drastic rate increases might be avoided.

According to preliminary calculations, the Dow Jones industrial average rose 202.28 Friday to close at 10,367.20.

For the week, the blue-chip index rose 505.08 points, its best performance since the week ended July 2, 1999, when it rose 586.68.

However, the Dow is still off nearly 10 percent for the year.

Powered by tech stocks, the Nasdaq rallied again Friday, crossing 4,900 for the first time and closed at a new record. The index rose 159.79 to 4,914.30, well above its previous closing record of 4,784.08, set Wednesday. It's now up more than 20 percent for the year & fast approaching 5000.

Since March 3 of last year, the Nasdaq is up almost 117%.

Says Paine Webber's Arthur Cashin, "the numbers were a big hit down here."

The 43,000 new jobs created in February were the weakest showing since 28,000 jobs were added in May 1999. Jobs growth was restrained in part by sluggish growth in the service sector - normally the engine behind job creation in the United States.

The service sector added 62,000 jobs in February, the fewest since August 1997, when 10,000 jobs were added.

February's overall payroll number was significantly lower than the 228,000 range many analysts were forecasting.

The small gain followed a surge of 384,000 jobs added to the nation's payrolls in January. That reflected better-than-normal weather in the early part of the month. The government had previously estimated that 387,000 jobs were created in January.

Average hourly earnings, a key gauge of inflation pressures, rose by 0.3 percent to $13.53 in February on target with most analysts' expectations. In January, wages grew by an unrevised 0.4 percent.

Economists always keep a close eye on wage and job growth. While wage and job gains are good developments for workers, economists and members of the Federal Reserve worry that too-strong growth could rekindle inflation. They fear that employers trying to attract scare workers will offer higher wages and benefits to lure them increased costs that could drive up consmer prices.

The Federal Reserve has raised interest rates four times since June to slow the rip-roaring economy and keep inflation at bay. Given the outlook for continued strong growth, many economists widely expect the central bank will bump up rates again on March 21.

Financial markets were looking at today's report for clues about the future course of interest rates.

Retailers added 33,000 jobs in February, while business services added 6,000. Manufacturers added 5,000 jobs.

Manufacturers, which lost 248,000 jobs last year, are recovering from the effects of a global financial crises that struck in 1997, depressing overseas demand for U.S. goods.

But 26,000 jobs were lost in construction, which had posted big gains in January due to the mild weather. The government said the largest employment declines occurred in weather-sensitive industries, such as heavy construction, concrete, and masonry and roofing trades.