NEW YORK— U.S. stocks pared their early gains on Friday as traders dissected mixed reports on consumer sentiment, retail sales and business inventories after a week of record-setting gains and losses on Wall Street.
The government says that consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But a survey on consumer sentiment fell to its lowest level in more than 30 years. And a separate report showed that businesses increased their stockpiles in July by the smallest amount since May 2010.
Traders are already dizzy from seesaw trading driven by concerns about economic growth and a spreading financial crisis in Europe.
In midmorning trading, the Dow Jones industrial average rose 78 points, or 0.7 percent, to 11,222. The Standard & Poor's 500 index was up 6, or 0,5 percent at 1179. The Nasdaq composite index rose 5, or 0.2 percent, to 2,498.
If shares close higher, it will be the first time in more than a month that the market has risen two days in a row. The Dow and the S&P last rose for two trading days on July 6 and 7.
A bath of bad economic news has pummeled markets since before they started their long slide three weeks ago, on July 22. At Thursday's close, the Dow had fallen more than 12 percent since that date.
The strong retail sales added to a recent trend of more positive data about the economy. The government said last week that hiring picked up in July after two dismal months, though employers still are adding jobs too slowly to significantly reduce unemployment. On Thursday, the government said that applications for unemployment benefits had fallen to a four-month low.
But any gains are seen as fragile. If consumer sentiment remain weak, sales would likely slow.
Shares have swung by hundreds of points each day this week as traders react with hair triggers to news about the economy, Federal Reserve policy and a financial crisis in Europe that threatens to spill over into U.S. banks.
There is no question the sharp selloff in asset markets around the world over the past few weeks, on top of an already fragile economic picture, had a major influence on today's reading," wrote Peter Boockvar, managing director at Miller Tabak + Co., in a note to clients.
Retail sales climbed 0.5% in July, which was inline with estimates and the biggest gain since March. Excluding automobiles, sales climbed 0.5%, which was slightly better than forecasts of a gain of 0.2%.
"The consumer is at the center of the weak economy debate ... and as such, even a modestly better-than-expected number today provides us with some level of relief," Daniel Greenhaus, chief global strategist at BTIG, wrote in a note, referring to the closely-watched component that excludes automobile sales.
Retailers, such as Target (TGT: 47.89, +0.62, +1.31%) and Best Buy (BBY: 24.52, -0.43, -1.72%), can be particularly affected by these data, but it often has an impact on the broader markets.
Trading has been tumultuous in the last four trading sessions. The Dow has made 400-point gyrations higher and lower during every trading day this week -- for the first time in history. The Dow soared 423 points on Thursday, on the heels of a 520 points in violent trading where 100-point swings could happen in moments.
"The climate is fraught with risk," Peter Kenny, managing director at Knight Capital Group, wrote in a note, adding the instability has also created a slew of trading opportunities.
Wall Street paid close attention to headlines from Europe on Thursday, where media reports suggested certain large French banks may have capital issues. However, the banks denied the rumors, and on Friday, France, Italy, Spain and Belgium restricted short selling on affected issues, in a bid to stem the losses. The move sent European indicies soaring earlier in the session, and helped stock futures turn around.
The domestic economy has come into focus amid fears economic output and labor expansion may have hit a soft patch.
Gold, which has seen massive buying amid the volatility in equities, was fairly tame on Friday. The precious metal gained $3.40, or 0.2%, to $1,755 a troy ounce. In currencies, the euro gained 0.16% against the U.S. dollar, and the greenback slipped 0.13% against a basket of world currencies.
Energy futures were modestly higher. Light, sweet crude gained 2 cents, or 0.02%, to $85.71 a barrel. Wholesale RBOB gasoline climbed 2 cents, or 0.66%, to $2.85 a gallon.
Consumer gasoline prices have moderated following a downshift in wholesale markets. A gallon of regular costs $3.61 on average nationwide, down from $3.65 last month, but still well higher than the $2.78 drivers paid last year.
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