Stocks rose sharply Wednesday after the Commerce Department reported an unexpected increase in retail sales last month, easing some concerns about consumers' willingness to spend at a time of economic uncertainty. The Dow Jones industrials recorded their third straight gain, rising nearly 180 points.
The 0.3% rise in January retail sales followed a drop in December and was exactly opposite the 0.3% decline analysts had estimated for last month.
"The consumer is not tapped out yet, which is what everyone had thought," said Andrew Seibert, who helps oversee $400 million at Nextier Wealth Management in Pittsburgh. "The market is looking for every positive it can get at this point."
Retail stocks in the S&P 500 rose 0.3% on the data. Target climbed 60 cents to $54.51. Gap rose 12 cents to $20.06.
A separate business-inventory report indicating that the slowing economy might be causing a buildup of unsold goods on store shelves wasn't enough to dent the market's optimism.
Stocks have risen this week as investors have tried to determine whether Wall Street has reached a bottom after months of declines related to the housing and credit crises or whether further sluggishness in the economy will send stocks lower.
"So far this week there has been a positive bias, but I think what you're seeing is people taking a very cautious approach," said Scott Fullman, director of investment strategy at I.A. Englander & Co. "There is no great rush to jump in, and the preservation of capital is more important than growth at this moment."
The government's latest plan to help homeowners falling behind on mortgage payments continued to boost the market, Fullman said. Treasury Secretary Henry M. Paulson Jr. said Wednesday that he believed the economy would remain on a growth path, and pledged "aggressive action" to help borrowers having trouble with their home loans.
Meanwhile, President Bush on Wednesday signed a multibillion-dollar stimulus package that means $300 to $1,200 rebates for many American households, more for those with children.
The Dow rose 178.83 points, or 1.4%, to 12,552.24. The blue-chip index finished at its highs of the session.
Broader indexes also moved higher. The Standard & Poor's 500 index added 18.35 points, or 1.4%, to 1,367.21, and the Nasdaq composite surged 53.89 points, or 2.3%, to 2,373.93.
The Russell 2,000 index of smaller companies jumped 16.45 points, or 2.3%, to 721.93.
