Stocks rose in early trading after the Federal Reserve said production of cars and energy jumped in August. The Commerce Department said sales by retailers grew only slightly in August after a big gain in July.
"It's a reflection of stronger economic growth," said Kate Warne, an investment strategist for Edward Jones. "It continues to bode well for strength going into the fall and later in the year.
Warne said she expects the U.S. economy to grow about 3 percent this year, which is what most experts are forecasting. She said growth will be a bit weaker than in 2019, but that would still be better than most of the previous years since 2009.
Bond yields jumped Friday as investors interpreted the Federal Reserve report as a sign the economy will keep growing and interest rates will keep rising. That helped bank stocks, but it hurt high-dividend stocks.
Retailers and health care stocks also took small losses.
The S&P 500 index rose 0.80 points to 2,904.98. The index rose all five days this week after a four-day losing streak last week.
The Dow Jones Industrial Average added 8.68 points to 26,154.67. The Nasdaq composite slipped 3.67 points to 8,010.04.
The combination of trade worries and positive economic news helped smaller companies, which do more business in the U.S. than larger companies do. That makes them less vulnerable to flare-ups in trade tensions. The Russell 2000 index gained 7.40 points, or 0.4 percent, to 1,721.72.
Bloomberg News reported that President Donald Trump has told aides to go ahead with tariffs on $200 billion in imports from China. The report said the administration may be having difficulty finding products it can tax that won't result in major complaints from consumers and businesses.
China said Thursday the U.S. had reached out to open a new round of trade talks. The new round of tariffs would represent a major escalation in the U.S.-China conflict, which has lasted for most of this year.
Industrial companies also rose after the Federal Reserve's report. Aerospace company Boeing jumped 1.2 percent to $359.80 and shipbuilder Huntington Ingalls gained 1.6 percent to $252.90.
The industrial data is a sign the U.S. economy is likely to keep growing, which means the Federal Reserve is likely to continue raising interest rates. It is expected to raise interest rates later this month, the third increase this year out of an expected four.
The yield on the 10-year Treasury note rose to 2.99 percent from 2.96 percent late Thursday.
Banks and financial companies rose, as higher long-term interest rates help them make more money from mortgages and other types of loans. Prudential Financial added 2.9 percent to $99.86 and SVB Financial Group LendingTree gained 1.4 percent to $319.29.
A series of gas explosions killed one person at injured at least 10 and forced evacuations in three communities north of Boston. The Massachusetts Emergency Management Agency blamed the fires on gas lines that had become over-pressurized.
They are served by Columbia Gas, a unit of NiSource. NiSource's stock plunged 11.7 percent to $24.79.
Hurricane Florence came ashore in North Carolina Friday morning, and while its winds have weakened, experts say the storm surge is a significant threat. The storm is slow moving, meaning North and South Carolina could get days of heavy rain.
While Florence could do significant damage to the region, it's not expected to have a big effect on the overall economy. Economists at IHS Markit said the hurricane might slow down growth in the third quarter a bit but would likely contribute to growth in the fourth quarter.
Shares in British Columbia marijuana company Tilray, which have made huge gains in the last two months, slumped after Politico reported that the U.S. Customs and Border Patrol may ban people who work in the marijuana industry from entering the country.
Canada is set to legalize marijuana in October and stocks in the industry have soared recently. Tilray slumped 8.9 percent to $109.05. The stock was valued at $17 when Tilray went public in July.
Two competitors, Canopy Growth and Cronos Group, continued to rise. Canopy has doubled in valued this year and Cronos is up 34 percent.
Benchmark U.S. crude added 0.6 percent to $68.99 a barrel in New York. Brent crude, used to price international oils, dipped 0.1 percent to $78.09 a barrel in London.
Wholesale gasoline lost 1.1 percent to $1.97 a gallon and heating oil fell 0.6 percent to $2.21 a gallon. Natural gas dropped 1.8 percent to $2.77 per 1,000 cubic feet.
The dollar rose to 112.03 yen from 111.88 yen. The euro slipped to $1.1632 from $1.1692.
Gold lost 0.6 percent to $1,201.10 an ounce. Silver fell 0.7 percent to $14.14 an ounce. Copper sank 1.4 percent to $2.65 a pound.
The German DAX added 0.6 percent and the French CAC rose 0.5 percent. Britain's FTSE 100 index picked up 0.3 percent.
Japan's benchmark Nikkei 225 gained 1.2 percent and South Korea's Kospi advanced 1.4 percent. Hong Kong's Hang Seng rose 1 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay
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