Prices rose steeply on Wall Street yesterday as traders were pleasantly surprised by the government's report that inflation and the US economy were not running rampant after all. The employment report helped temper investors' concerns that the Federal Reserve might soon raise interest rates.

At the close of trading, the Dow Jones industrial average was up 136.15 points, or by 1.3%, at 10,799.84, adding to an 85-point gain on Thursday. For the week, the Dow was up 240.10. Broader stock indicators were also higher, including the Nasdaq composite index, which has been battered in recent weeks amid a sharp decline in technology stocks. The Standard and Poor's 500 rose 28.17 to 1,327.71, and the Nasdaq composite index rose 75.02 to 2478.34.

Advancing issues outnumbered decliners by an 8-to-5 margin on the New York Stock Exchange, with 1,838 up, 1,118 down and 602 unchanged. NYSE volume totalled 689.91 million shares, against 716.15 million in the previous session. The NYSE composite index rose 10.32 to 634.52, and the American Stock Exchange composite index rose 5.04 to 780.98