A government report showing weak April retail sales was already expected by the market, which fell sharply Thursday when individual retailers posted bleak monthly sales.
The Dow Jones Industrial Average was up 55 points at 13,270, lifted by gains in shares of Honeywell International Inc. , Dupont and AT&T Inc. .
Among blue chips, American International Group rose 0.7% after reporting a 29% profit rise, as its property and casualty insurance business avoided big losses and after it maintained premium growth.
The S&P 500 gained 7.1 points to 1,498, while the Nasdaq Composite advanced 11 points to 2,544.
Weighing on the Nasdaq, Amgen dropped 4.1% after being downgraded by both J.P. Morgan and Citigroup on the back of a decision from the U.S. Food and Drug Administration.
An FDA unit has recommended label changes for erythropoiesis stimulating agents, which could have a material impact on Amgen drug Aranesp in chemotherapy induced anemia. According to Citigroup, the decision puts roughly 22% of Amgen revenue at risk.
But technology shares found support from an upgrade of chip equipment maker Applied Materials . Its stock rose 1.4% after UBS upgraded the stock to buy from neutral, citing the firm's increased capital spending.
Economy back in play
After being set aside during earnings season, investors are once again focusing on economic data. Although the Federal Reserve left interest rates unchanged on Wednesday, it did note slowing economic conditions while maintaining that inflation remained its number one concern.
On that front, at least, Friday's data might be a relief.
Higher energy prices pushed up wholesale prices by 0.7% in April, but core inflation was tame again, the Labor Department reported.
Meanwhile, U.S. retail sales fell a worse-than-expected 0.2% in April, the worst showing in seven months, according to the Commerce Department. The weakness in sales spilled beyond home products to include clothing, sporting goods and restaurants.
According to Ian Shepherdson, chief U.S. economist at High Frequency Economics, even accounting for seasonal trends and an March accounting for the Easter holiday, the overall trend in sales is waning.
"May will likely be a bit better but overall [second-quarter] spending will be much slower than [first quarter's] 3.8%," he said, in a note.
CBOT Holdings gained 1% amid several reports about its future. It's agreed to merge with the Chicago Mercantile Exchange while the IntercontinentalExchange has launched an unsolicited offer. ICE's all-stock bid is now worth $2.2 billion more than the CME, The Wall Street Journal reported Friday.
Meanwhile the Deutsche Boerse withdrew a capital raising proposal, saying it has enough financing already to complete a $2.8 billion acquisition of the International Securities Exchange . Banc of America Securities lowered its ISE rating to neutral from buy, citing Deutsche Boerse shareholder concerns and doubts that a better bid will emerge.
Dow Chemical rose 1%. The firm and Saudi Aramco are close to signing a $20 billion deal to build a petrochemical plant in Saudi Arabia, the Financial Times reported.
The dollar was weaker against the euro and rose against the yen following the PPI and retail data.
Bonds advanced. The benchmark 10-year Treasuy bond was up 4/32 at 99 30/32, yielding 4.626%.
Gold futures rose $2.10 to $669.10 an ounce.
Oil futures rose 61 cents to $62.42 a barrel. The International Energy Agency lowered its 2007 global oil product demand forecast to 85.7 million barrels of oil a day, down about 70,000 barrels due to revisins to historical data, mainly in the Middle East.
Alcatel-Lucent jumped 3.4%. As it had earlier indicated, it reported a first-quarter profit decline and forecast second-quarter sales to rise. Credit Suisse upgraded the stock to outperform from neutral, citing improving visibility and incremental cost savings.
Nvidia rose 5% after it beat expectations with a 44% profit rise on 24% revenue growth.
Foot Locker dropped 7.6% after the sneaker retailer cut its earnings forecast, citing a 5.1% decline in same-store sales and additional price markdowns.
By Nick Godt