NEW YORK (CNN/Money) - Stocks eked out gains Friday, managing to close the week and the month of August higher, as investors found encouragement in some positive economic data and shored up positions ahead of the long holiday weekend.

The Nasdaq composite (up 10.27 to 1810.45, Charts) added about 0.6 percent, managing to close at a new 16-month high. The tech-heavy index rose 2.6 percent for the week and 4.4 percent in August -- its seventh consecutive month of gains.

The Dow Jones industrial average (up 41.61 to 9415.82, Charts) edged up about 0.4 percent, adding 0.7 percent for the week and 2 percent for the month. The Standard & Poor's 500 index (up 5.17 to 1008.01, Charts) closed 0.5 percent higher, reaching its highest point in more than two months. The index bounced 1.5 percent higher for the week and 1.8 percent in August. The Dow and S&P each have risen for six straight months.

"I think it's a pretty constructive day," said John Hughes, market analyst at Shields & Co. "It was nice that you got some more encouraging economic news. This week was a stealthy-type rally...There really isn't any selling pressure out there, there seems to be more buying pressure."

The few investors who showed up on Wall Street focused on the economy and found a surprisingly strong jump in a manufacturing report and a bounce in consumer spending encouraging.

Volume was light, as many investors and traders took off early ahead of the long holiday weekend. Market breadth was positive, with advancers outpacing decliners more than two to one on the New York Stock Exchange, where 943 million shares traded, and about nine to seven on the Nasdaq, where 1.2 billion shares changed hands.

U.S. stock and bond markets will be closed Monday in observance of the Labor Day holiday. While traders said volume and activity could continue to be light through Tuesday, some key events may turn out to be market movers, especially later in the week.

During the week, investors will get August readings on manufacturing and services from the Institute for Supply Management, reports from automakers on August sales, data on July construction spending and factory orders, and readings from the Labor Department on unemployment in August.

In addition, the Federal Reserve was scheduled to release its "beige book" report on the economy on Wednesday.

Meanwhile, traders also looked ahead to the close of the third quarter at the end of September when corporate reports will provide another take on the health of the economy.

"Next week may be a little more challenging," said Peter Green, market analyst at MKM Partners. "We're really looking forward now to third-quarter profits and the market could be in a trading range until then."

Most of investors' focus was tied to the economy Friday. The Chicago-area purchasing managers' index for August showed a surprisingly strong gain, rising to 58.9 from July's 55.9. The reading, a precursor of the national index, which is due Tuesday, was expected to come in at 56. Any number above 50 represents manufacturing expansion.

Before the opening bell, the Commerce Department said consumer spending rose 0.8 percent in July, matching forecasts, after rising a revised 0.6 percent in June. Consumer spending is closely watched since it fuels about two-thirds of the nation's economy. Personal income rose 0.2 percent, a bit less than the forecast for a 0.3 percent rise.

In the day's only mild disappointment, the University of Michigan's revised reading on its consumer sentiment index for August came in at 89.3, down from 90.9 in July.

The absence of any current economic commentary in Federal Reserve Chairman Alan Greenspan's speech, entitled "Monetary Policy and Uncertainty," contributed to Wall Street's lack of enthusiasm throughout much of the day. Greenspan delivered his oration at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyo.

In corporate news, Novellus (NVLS: down $0.89 to $39.96, Research, Estimates) dipped 2.2 percent after the company backed its earlier third-quarter forecast for breakeven results before charges, but said it expects a $70 million restructuring charge for the quarter to write down inventory.

A couple of retailers also garnered some attention.

Starbucks (SBUX: up $0.75 to $28.39, Research, Estimates) bounced 2.7 percent after reporting that its sales at stores open at least a year jumped 9 percent in August.

Kmart (KMRT: up $1.23 to $30.67, Research, Estimates), which emerged from bankruptcy protection in May, posted a much narrower second-quarter loss of 6 cents a share, compared with a loss of 58 cents in the year-ago period. Shares of Kmart spiked 4.2 percent.

Stocks in Europe closed mostly lower. Asian markets ended mostly higher.

Treasury prices tipped lower, with the yield on the 10-year note up to 4.46 percent from 4.42 late Thursday. Bond prices and yields move in opposite directions. The Treasury market closed early Friday ahead of Monday's holiday. The dollar fell against the euro and the Japanese yen.

NYMEX light sweet crude oil prices slid 3 cents to $31.57 a barrel. COMEX gold rallied $5.20 to $376.80 an ounce.