The tech-heavy Nasdaq composite index gained 38.95 points to 2,149.44. The Dow Jones Industrial Average rose 78.47 points to 10,990.41.
The job market held up better than expected in May, as the unemployment rate fell for the first time in eight months. According to a government report, the jobless rate eased to 4.4 percent from 4.5 percent in April, defying economists' predictions that unemployment would tick higher.
Meanwhile, the U.S. manufacturing sector deepened its ongoing slump, according to a report from the National Association of Purchasing Management.
The association said its monthly index of manufacturing activity, compiled from a survey of purchasing managers in more than 350 manufacturing companies from 20 industries, fell in May to 42.1 from 43.2 in April, but held above a decade low of 41.2 hit in January. A reading of less than 50 indicates that manufacturing activity is contracting.
"The underlying tone was pretty positive with the employment numbers," said Peter Coolidge, managing director of equity trading at Brean Murray. "The NAPM threw a different light on things, but overall the employment figures win the day. It is a thin market today, but a good way to start out the month."
The contradictory news left analysts busy sorting out what it would mean for the Federal Reserve's next meeting on interest rates.
Among stocks to watch, Redback Networks bounded ahead $1.08 to $15.52 on Friday after Morgan Stanley upped the stock's price target and said that it's likely to be clear sailing for the maker of telecommunications equipment.
BellSouth was down 67 cents to $40.56 after announcing that declining currencies in Brazil and Colombia will result in losses of 5 cents to 6 cents per share in the second quarter. The local telephone service provider will take a noncash charge because of the currency losses.
In the latest bid to stem its financial meltdown, troubled Internet service provider PSINet, down 2 cents to 5 cents, said it filed for Chapter 11 bankruptcy protection along with 24 of its subsidiaries in the United States.
Among technology bellwethers, Amazon.com was up 26 cents to $16.95. AOL Time Warner dropped 56 cents to $52.75, and Yahoo rose $1.35 to $19.46.
Cisco Systems fell 41 cents to $18.85. Intel rose $1.73 to $28.74, and Microsoft rose $1.16 to $70.34.
Staff and Reuters contributed to this report.