By Matt Jarzemsky 

U.S. stocks rose Friday, with the Dow industrials on pace to cap their biggest monthly gain since February.

The Dow Jones Industrial Average rose 13 points, or 0.1%, to 17092 in midday trading. The blue-chip benchmark was up 3.2% on the month and headed for its fourth-straight weekly gain.

The S&P 500 added five points, or 0.3%, to 2002. The Nasdaq Composite Index rose 13 points, or 0.1%, to 4579.

Stocks have benefited from better-than-expected corporate earnings, improvement in much of the U.S. economy, and investors' distaste for low-return prospects in other assets such as bonds. That positive backdrop has helped stocks to grind higher on a slow week ahead of Monday's Labor Day holiday in the U.S., for which stock trading will be closed.

"We're just not getting any kind of significant correction, and there's nothing out there in the near term that's going to be the catalyst for that move," said Gordon Charlop, managing director at New York brokerage Rosenblatt Securities. "It's a slow recovery but it's a healthy one" for big U.S. companies.

Many investors are still looking to buy shares of companies they like at any sign of a pullback, he added.

Traders said the level of activity was low Friday, in line with the market's recent summer lull. So far this week, an average 4.38 billion shares have changed hands daily, 30% below the year-to-date average, according to FactSet.

Shares of sectors seen as particularly risky outperformed. The Russell 2000 index of small companies' shares was up 0.7%. The Nasdaq Biotechnology Index added 0.9%.

Bonds also moved toward closing out a big monthly rally, fueled by optimism central banks will maintain an accommodative stance toward markets. The 10-year U.S. Treasury note was little changed in thin trade Friday, yielding 2.34%. But so far this month, the note's yield--which moves inversely to its price--is on pace for its biggest slide since January.

On the economic front Friday, household spending fell 0.1% in July, the Commerce Department reported, bucking economists' median forecast for a 0.1% increase. Personal income rose a less-than-expected 0.2%.

Russian President Vladimir Putin on Friday used harsh language against Ukraine and its allies over the failure of peace talks. Ukraine has accused Russia of sending troops to fight alongside rebels in eastern Ukraine.

European stocks rose Friday, with the Stoxx Europe 600 adding 0.3%, reversing earlier gains. The euro zone's annual rate of inflation fell to 0.3% in August from 0.4% in July. That is a far cry from the European Central Bank's medium-term target of inflation just under 2%. The continued decline in inflation has added to expectations that the ECB will be forced to take more aggressive action to boost the region's economic recovery.

In corporate news, Avago Technologies Ltd. rallied 8.8% and hit a record high after the chip company reported better-than-expected quarterly results.

In commodity markets, crude-oil futures rose 0.3% to $94.83 a barrel. Gold futures fell 0.3% to $1,286.70 an ounce.

Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com