• Retail Rise: February purchases up 0.3%
• Debt Deduction: Fed reports household debt drop
• Forrester Forecast: Business spending boom for IT
• Yellen Tapped: San Francisco Fed head to become vice chair

The Lowdown

An early Friday lift for stocks flattened at the close, despite spending showing a surprise increase in February.

The Dow Jones Industrial Average climbed 12 to 10624. The S&P 500 was flat at 1150 and the Nasdaq was flat, down 2 at 2367.

In February, U.S. retail sales rose by 0.3%, when economists surveyed by Dow Jones Newswires were expecting a 0.3% decrease. Excluding the car sector, all other retail sales rose 0.8%, more than the 0.1% forecasted increase. The retail jump was boosted by soaring electronic store sales, despite blizzards that crippled the East Coast and a 2% dive in U.S. car and parts sales in February.

Meanwhile, President Barack Obama plans to nominate San Francisco Fed President Janet Yellen as vice chairman of the Federal Reserve. Known as a strong supporter of Fed Chairman Ben Bernanke's low-interest-rate policy to fight the deep economic downturn, Ms. Yellen would replace Donald Kohn as Fed vice chair when the central bank veteran's term expires in late June. The White House also elected two other nominees to serve on the Fed's seven-member Board of Governors. Their names aren't yet known.

The financial sector will likely be in the spotlight after a new report on the collapse of Lehman Brothers said demands from J.P. Morgan Chase and Citigroup for collateral helped to drive Lehman into bankruptcy, according to a court-appointed examiner. The report also detailed a practice at Lehman in which it used repurchase agreements to make it appear that leverage could be moved off a firm's balance sheet.

In other markets, the dollar weakened against both the yen and the euro. Crude-oil prices ebbed 83 cents to $81.28 a barrel. Treasurys slipped to yield 3.70%.

Corporate News

• Shares of National Semiconductor (NSM) rose after the company reported third-quarter profit more than doubled and predicted a 4% to 8% sequential revenue rise.

• Yara International ASA (YRAIF) of Norway formally gave up its pursuit of Terra Industries (TRA), which could accept a rival bid from CF Industries Holdings (CF).Also on the fertilizer front, Potash Corp. of Saskatchewan (POT) upped its earnings guidance on a sharp rebound in demand.

The Economy

• The Reuters/University of Michigan index of consumer sentiment dropped to 72.5 in March from 73.6 in February as signs multiply that the labor market is approaching a trough but remains frail. Economists surveyed by MarketWatch had been expecting the sentiment index to hit 74 in March. STORY
• Business inventories remained unchanged in January, reflecting tepid sales and increasing stocks of automobiles and other goods, according to the Commerce Department. Wall Street economists had forecast inventories would rise by 0.1%.

Dow Jones Newswires contributed to this report.