NEW YORK (AP) -- An encouraging manufacturing report nudged the stock market higher Friday, giving it a slight gain for the week, even as a deadline for avoiding sweeping government spending cuts loomed.
The Dow Jones industrial average rose 35.17 points, or 0.3 percent, to close at 14,089.66.
It was down as much as 117 points in early trading but recovered following news that U.S. manufacturing expanded in February at the fastest pace since June 2011. The Institute for Supply Management said its manufacturing index reached 54.2, up from January's reading of 53.1. Any reading above 50 signals growth.
President Barack Obama summoned congressional leaders to the White House for a meeting aimed at avoiding the $85 billion in across-the-board spending cuts set to kick in Friday. The cuts are part of a 10-year, $1.5 trillion deficit reduction plan that was designed to be so distasteful to both Democrats and Republicans that they would be forced to drum up a longer-term budget deal.
Any agreement between the White House and Congress on the spending cuts could drive the market up next week, regardless of whether investors consider it a good deal or not, said Stephen Carl, head equity trader at The Williams Capital Group in New York.
"The lack of clarity is the problem," he said. "I think it will be a positive for the market just as long as there's concrete news."
In other Friday trading, the Standard & Poor's 500 index rose 3.52 points, or 0.2 percent, to 1,518.20. The Nasdaq composite gained 9.55 points, 0.3 percent, to 3,169.74.
All three indexes ended higher for the week: The Dow rose 0.6 percent, the S&P 500 and Nasdaq each rose about 0.2 percent.
The Dow came within 15 points of its record close of 14,164 on Thursday before sliding back and ending the day lower.
Oil and gas companies fell Friday as the price of crude sank to its lowest level of the year. Halliburton, Peabody Energy and other energy stocks were among the biggest losers in the S&P 500. Benchmark U.S. crude oil dropped below $91 a barrel.
Americans' incomes fell 3.6 percent in January, the worst one-month drop in 20 years, the Commerce Department said Friday. U.S. consumers increased spending modestly in January but cut back on major purchases. The report suggests that the expiration of tax cuts on Jan. 1 may have made Americans more cautious.
Unemployment across the 17 European Union countries that use the euro currency hit a record 11.9 percent during January. That drove money into U.S. Treasurys, pushing their prices up and their yields down.
The yield on the 10-year Treasury note fell to 1.85 percent from 1.88 percent late Thursday.
Among other stocks making big moves:
— Gap added 95 cents to $33.87. The retailer said late Thursday that its quarterly profits jumped 61 percent, topping analysts' estimates, helped by better sales at its Old Navy stores. Gap also raised its quarterly dividend to 15 cents.
— Best Buy Co. rose 75 cents to $17.16 after the retailer said that its fourth-quarter loss narrowed as better sales in the U.S. helped offset weakness abroad, particularly China and Canada.
— Groupon jumped 13 percent following news that CEO Andrew Mason was fired. The online deals company's stock plunged 24 percent Thursday after the company delivered a weak revenue forecast for the current quarter. Its stock gained 57 cents to $5.11
AP Business Writer Steve Rothwell contributed to this story.