US stocks edge higher, led by banks and smaller companies

NEW YORK – U.S. stocks are slightly higher Friday as banks climb but retailers and big-dividend stocks slide. The Federal Reserve said production of cars and energy jumped in August.

Interest rates are climbing as investors expect continued economic growth and further interest rate increases. Small companies are advancing. However, monthly retail sales were weaker than analysts expected.

KEEPING SCORE: The S&P 500 index rose 2 points, or 0.1 per cent, to 2,906 as of noon Eastern time. The Dow Jones Industrial Average rose 59 points, or 0.2 per cent, to 26,205. The Nasdaq composite gained 12 points, or 0.2 per cent, to 8,026.

The Russell 2000 index of smaller-company stocks gained 11 points, or 076 per cent, to 1,725.

FACTORY FACTOR: U.S. industrial production rose by a healthy 0.4 per cent in August, according to the Federal Reserve. The central bank said production of autos climbed, while production of oil and natural gas continued to rise. Aerospace company Boeing jumped 1.7 per cent to $361.39 and shipbuilder Huntington Ingalls gained 1.6 per cent to $253.06.

The Fed’s report is a sign the U.S. economy is likely to keep growing, which means the Federal Reserve is likely to continue raising interest rates. The yield on the 10-year Treasury note rose to 3 per cent from 2.96 per cent late Thursday.

Banks rose, as higher long-term interest rates help them make more money from mortgages and other types of loans. Other financial companies also jumped. Bank of America gained 0.7 per cent to $30.37 and Prudential Financial added 2.6 per cent to $99.63.

TRADE UPDATE: China’s government said Thursday that the U.S. government has invited it for talks on their escalating tariff dispute, ahead of a decision by President Donald Trump on whether to raise duties on $200 billion of Chinese imports.

RETAIL SALES: Consumers slowed their spending in August and the Commerce Department said retail sales grew 0.1 per cent for the month. The prices for clothing and other items dipped, which might have encouraged shoppers but reduced revenue for companies. Gap fell 1.3 per cent to $27.85 and TJX fell 1 per cent to $107.90.

Consumer confidence is at its highest level in 18 years, and the slowdown in August could prove to be temporary.

GAS EXPLOSIONS: A series of gas explosions killed one person at injured at least 10 and forced evacuations in three communities north of Boston. They are served by Columbia Gas, a unit of NiSource. The company put out a statement late Thursday saying its crews were performing safety checks.

The company’s stock lost 9.2 per cent to $25.51.

STORM WATCH: Hurricane Florence came ashore in North Carolina Friday morning, and while its winds have weakened days, 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 HIS Markit said the hurricane might slow down growth in the third quarter a bit but would likely contribute to growth in the fourth quarter.

Analyst Ryan Detrick at LPL Financial said hurricanes generally have little immediate effect on stock prices.

UP IN SMOKE: Shares in British Columbia marijuana company Tilray 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 4.8 per cent to $114.04. Its stock was valued at $17 when it went public two months ago.

ENERGY: Benchmark U.S. crude jumped 1.8 per cent to $69.80 a barrel in New York. Brent crude, used to price international oils, rose 0.1 per cent to $78.19 a barrel in London.

CURRENCIES: The dollar rose to 112.08 yen from 111.88 yen. The euro slipped to $1.1664 from $1.1692.

OVERSEAS: The German DAX added 0.6 per cent and the French CAC rose 0.5 per cent. Britain’s FTSE 100 index picked up 0.3 per cent.

Japan’s benchmark Nikkei 225 gained 1.2 per cent and South Korea’s Kospi advanced 1.4 per cent. Hong Kong’s Hang Seng rose 1 per cent.

____

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