NEW YORK – Higher retail sales and a strong earnings report from Google Inc. sent stocks higher Friday. The tech-heavy Nasdaq composite index was headed for its best week in more than two years.
Retail sales increased 1.1 percent in September, the biggest gain in seven months and twice what economists projected. Retail sales are a key barometer of consumer spending, which helps drive economic growth.
Google Inc. surged 5.7 percent after reporting that its third-quarter income jumped 26 percent. Apple Inc. rose 2.7 percent as its new iPhone went on sale. Record-setting early orders for the iPhone 4S showed why the company has thrived despite the weak economy.
The two tech leaders helped the Nasdaq gain 7 percent this week. That's the most since July 2009. The Nasdaq rose 31 points, or 1.2 percent, to 2,651 at 2:10 p.m. Eastern.
The Dow rose 105 points, or 0.9 percent, to 11,583 as of 2:30 p.m. The average of 30 large companies started the year at 11,578 and spent much of Friday morning trading positive for the year. The Dow has shot up more than 6 percent in less than two weeks, after hitting a yearly low of 10,655 on Oct. 3.
The Standard & Poor's 500 index rose 13, or 1.1 percent, to 1,217.
The Dow and the S&P are headed for their best weeks in a month. The Dow is up 4 percent this week, the S&P 5 percent.
The market has been helped by recent economic data, which appeared encouraging mainly because expectations were so low. Hiring has improved modestly, and business surveys showed manufacturing growth.
Retail sales are the government's first look at consumer spending each month. Household spending accounts for 70 percent of economic activity. If they cut back, a recession is more likely. When they spend more, economic growth is more likely.
American Express Co. fell 1 percent, the most of any company in the Dow. Bank of America Corp. was the Dow's second-biggest loser, falling 0.8 percent.
European markets extended an eight-day rally despite an overnight downgrade of Spain by Standard & Poor's and warnings from Fitch about big banks. Food and soap company Unilever PLC announced a major acquisition, and Swiss agrochemicals firm Syngenta reported strong third-quarter sales.
European leaders were preparing to hash out the details of a plan to stabilize the region's banks. They are burdened with billions of Greek debt that is unlikely to be repaid in full. Some analysts say the banks need bigger capital cushions to protect against those losses.
Google reported late Thursday that its third-quarter revenue was one-third higher than last year. It was Google's fourth consecutive quarter of year-over-year revenue growth. Google is doing well because of the reach of its search engine and the effectiveness of its ads.
The government also said Thursday that businesses added to their stockpiles for the 20th consecutive month while sales rose for a third straight month. The increase suggests businesses remained confident enough to keep stocking their shelves.
The Dow is on track to rise for a third straight week. That hasn't happened since April. It has been a welcome respite for investors after a summer of intensely volatile trading.
Daniel Wagner can be reached on Twitter at twitter.com/wagnerreports.