Stocks jumped back toward record levels Friday as a second straight day of favorable economic data provided further tonic for the market's sudden bout with interest rate jitters.

The Dow Jones industrial average rose 83.70 to 9,147.07, up 82.45 for the week and less than 40 points shy of the April 21 closing record of 9,184.94.Broader indexes also extended Thursday's rally as a series of reports, including the first broad reading on April's business conditions, reinforced arguments that economic activity isn't accelerating at an inflationary pace.

A national organization of factory executives reported that the manufacturing sector grew at a slower pace during the just-ended month as Asia's economic troubles continued to weigh down exports. The report also showed that prices for factory supplies continued to fall in April.

The data served as a timely complement to Thursday's news that employment costs - the dominant force behind inflation - rose only moderately in the first three months of the year.

Only days earlier, on Monday, stocks tumbled amid reports that the Federal Reserve might raise its key lending rates to prevent an inflationary spurt.

"The recent data should help stay the Fed's hand," said Jeffrey Applegate, chief investment strategist at Lehman Brothers. He pointed to next Friday's report on April employment as the next major hurdle, but said it's unlikely that Fed officials will raise rates at their May 19 meeting.

"At the end of the day, the Fed's job is to keep inflation under control," said Applegate. "It's politically tough to raise interest rates when we are persistently seeing growth better-than-expected and inflation lower-than-expected."

J.P. Morgan rose 3 7/8 to 135 1/8 and American Express rose 3 5/16 to lead the Dow as investors rounded up the usual suspects in another wave of merger speculation, triggered by reports of talks between BankBoston and Fleet Financial Group. The Dow also drew a boost from Chevron, up 3 11/16 to 86 3/8, and Exxon, up 2 9/16 to 75 5/8.

Advancing issues outnumbered decliners by an 8-to-5 margin on the New York Stock Exchange, where volume totaled 581.97 million shares, down sharply from Thursday's 706.81 million.

The Standard & Poor's 500-stock list rose 9.25 to 1,121.00, the NYSE composite index rose 4.54 to 581.91, and the Nasdaq composite index rose 5.03 to 1,873.44

The Russell 2000 index of smaller companies rose 2.05 to 484.94, and the American Stock Exchange composite index rose 3.34 to 749.86.

Overseas, Tokyo's Nikkei stock average fell 0.3 percent, and London's FT-SE 100 rose up 1.4 percent. German markets were closed for a holiday.