Blue-chip stocks closed higher as strong sales at the nation's largest retailers reminded investors that economic growth isn't necessarily bad news.
The Dow Jones industrial average rose 85.80 to close at 10,663.69.
Broader indicators were mixed. The Standard & Poor's 500-stock index rose 4.73, to 1299.54, but the technology-dominated Nasdaq composite fell 29.09 to close at 2403.32.
Stock trading has been especially volatile since May 18, when the Federal Reserve Board warned it would raise interest rates if it determined that inflation was creeping into the booming U.S. economy.
Since that warning, the market has turned on every new sign of inflationary pressures. Continued signs of growth -- ordinarily a boon to stocks -- have spooked investors who fear that higher interest rates will cut into corporate profits.
Today, however, investors welcomed good news from the nation's biggest retailers. Most reported stronger-than-expected sales in May, with specialty retailers and discounters leading the sector. Wal-Mart rose 1 1/8, to 45 1/2, and Gap Inc. gained 3 1/4, to 65 7/8.
The market also gained support from a Commerce Department report that showed orders to American factories for manufactured goods fell 1.2 percent. The decline suggested that if the Fed does raise rates, the increase will be a modest quarter of a percentage point, analysts said.
Traders remain focused on the Friday morning release of the Labor Department's unemployment data. The wage component of the report was expected to offer a more pointed indication of whether inflation has returned to the U.S. economy.
The volatile Internet companies that helped the Nasdaq Stock Market rally Wednesday headed lower again. Amazon.com led the decliners and is now worth less than half its value in late April. It fell 7-1/16, to 105-1/16.
In the meantime, investors turned to a broad-based range of stocks.
Companies as diverse as American Express, up 2-15/16 at 121 3/8, Hewlett Packard, up 1-11/16 at 91-7/16, and Johnson & Johnson, up 2 at 93-11/16, led the Dow stocks.
Chevron fell 7/16, to 91-9/16, and Texaco dropped 2-3/16, to 62-5/16, after they called off merger talks.
Advancing issues outnumbered declining ones by 6 to 5 on the New York Stock Exchange, where trading volume totaled 733.3 million shares, up from 730.5 million on Wednesday.
The NYSE composite index rose 3.70, to 624.20; the American Stock Exchange composite index rose 4.71, to 775.94; and the Russell 2000 index of smaller companies fell 0.76, to 435.98.