Still, buyers narrowly outnumbered sellers after a government employment report showed the nation's employers cut far fewer jobs than expected last month, stirring optimism about the buoyancy of the economy. But after sharp gains Thursday, some investors decided to pull some money from stocks.

A separate report showing that factory orders increased in March following two months of declines helped boost investors' enthusiasm. However, a surprise loss from Sun Microsystems Inc. weighed on the tech-laden Nasdaq composite index.

The better-than-expected employment report came days after the Federal Reserve lowered interest rates by a quarter point and hinted it could stand pat at future meetings - a move that could help shore up an anemic dollar and combat worrisome inflation.

The Labor Department's report that employers cut 20,000 jobs in April was a relief to Wall Street, which had been expecting payrolls to fall by 70,000 jobs. The unemployment rate fell to 5 percent from 5.1 percent. This marked the fourth straight month of job losses, but the data signaled that perhaps the economy might be resisting falling into recession.

The Commerce Department said Friday that U.S. manufacturers saw orders increase 1.4 percent in March. Economists expected a 0.2 percent increase after declines in January and February.

Meanwhile, the Fed said it will work with European central banks to expand efforts to deal with the global credit crisis. The central bank will boost the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, up from the $100 billion it supplied in April.

Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, said stocks pulled back from the day's highs as investors locked in gains following a decent run-up.

"This is just normal profit-taking," he said, adding: "Sun Microsystem's earnings today didn't help the cause."

In midafternoon trading, the Dow Jones industrial average rose 9.45, or 0.07 percent, to 13,091.45 after being up more than 100 points earlier in the session.

Broader stock indicators also declined. The Standard & Poor's 500 index slipped 0.27, or 0.02 percent, to 1,409.07, while the Nasdaq fell 14.66, or 0.59 percent, to 2,466.05.

Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange, where volume came to 829.9 million shares.

The moves Friday came a day after a rising dollar and falling oil prices emerged as promising signs for the economy. The Dow soared nearly 190 points Thursday to close above 13,000 for the first time since Jan. 3.

Bond prices declined Friday as some investors moved into stocks from the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.83 percent from 3.77 percent late Thursday.

Light, sweet crude rose $3.13 to $115.65 per barrel on the New York Mercantile Exchange. The dollar was mixed against other major currencies, while gold prices rose.

Rovelli said investors apparently felt the recent run-up had occurred too quickly.

"The environment is not that great," he said, referring to energy prices that remain elevated even off their highest levels. "We're overbought. We were overdue for some profit-taking."

In corporate news, Sun Microsystems shares fell $3.69, or 23 percent, to $12.64 after the company stunned investors late Thursday by reporting a loss for the third quarter. The server and software maker blamed the loss on sagging sales to U.S. consumer-oriented companies that are delaying big-ticket spending.

Overseas, Japan's Nikkei stock average rose 2.05 percent. Britain's FTSE 100 finished up 2.11 percent, Germany's DAX index added 1.36 percent, and France's CAC-40 rose 1.46 percent.

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