NEW YORK (AP) -- Stocks rose in early trading Friday after a government report confirmed that personal spending fell in February to its weakest level in 17 months but that personal income rose more than expected.
The Commerce Department's report showed consumer spending rose by 0.1 percent last month, in line with Wall Street's expectations. But word that personal incomes rose by 0.5 percent in February came as a surprise as the market was looking for a 0.3 percent rise.
Investors appeared somewhat cheered after the report showed that an important inflation gauge tied to consumer spending rose only 0.1 percent when excluding often-volatile energy and food costs. The reading, the Federal Reserve's preferred measure of inflation, is up 2 percent over the past 12 months. With so-called core inflation back within the Fed's target of 1 percent to 2 percent it could be easier for the central bank to justify further interest rate cuts without fear of adding too much money to the economy and driving up prices.
But a profit warning from J.C. Penney Co. stirred concerns about the well-being of consumers and perhaps kept investors' gains in check. As Wall Street tries to determine the degree to which the economy is slowing, any news that consumers are less willing to reach into their wallets is unwelcome. That's because consumer spending accounts for about 70 percent of U.S. economic activity.
Penney said it expects its first-quarter profit of 50 cents per share, down from an earlier target of 75 cents to 80 cents. The stock fell $3.44, or 8.5 percent, to $37.08.
In the first minutes of trading, the Dow Jones industrial average rose 40.05, or 0.32 percent, to 12,342.51.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 5.65, or 0.42 percent, to 1,331.41, and the Nasdaq composite index advanced 14.19, or 0.61 percent, to 2,295.02.
Stocks declined for a second day Thursday, with the Dow falling 120 points, as investors found little reason to continue a big rally that started the week; a government report confirmed a big economic slowdown in the fourth quarter.