A spate of good news, including better-than-expected retail sales and worker productivity figures and a major court victory for drugmaker Merck, drove stocks higher Thursday, although a jump in oil prices limited the gains.
Wall Street's inflation worries were mollified by the latest government report on productivity, which rose 4.1 percent in the third quarter, the biggest rise in a year. With workers more productive, they can be paid more without increasing the risk of inflation.
And while investors remain cautious about consumer spending this winter because of high heating prices, October's retail sales reports were generally stronger than expected, with Wal-Mart Stores, Costco Wholesale and Nordstrom all surpassing expectations.
Yet the market received a harsh reminder of the long-term problems the economy faces as oil prices rose, eating into some of the market's gains.
The Dow Jones industrial average rose 49.86, or 0.5 percent, to 10,522.59. The Standard & Poor's 500-stock index gained 5.18, or 0.4 percent, to 1219.94. The Nasdaq composite index climbed 15.91, or 0.7 percent, to 2160.22.
Merck jumped $1.07, to $29.48, after a New Jersey jury found the drugmaker did not commit consumer fraud and did not hide risks associated with its Vioxx painkiller from patients and doctors.
Nordstrom gained 85 cents, to $36.60, after it posted strong October sales that beat analysts' projections. Costco also beat expectations and gained 16 cents, to $48.67.
Wal-Mart fell 11 cents, to $47.45, despite reporting a 4.3 percent increase in same-store sales.
Comcast fell $1.44, to $27.36, after reporting flat earnings for the third quarter, despite a nearly $500 million increase in revenue. The company also lowered its cash-flow estimates for the full year.
Guidant slid $2.83, to $57.57, after New York Attorney General Eliot L. Spitzer filed a civil suit against the company, accusing it of failing to inform physicians of problems with its medical devices. The suit came a day after would-be acquirer Johnson & Johnson signaled it might pull out of the $25.4 billion deal because of Guidant's possible liability issues.
New York Stock Exchange composite index rose 24.99, to 7534.81.
American Stock Exchange index rose 13.00, to 1694.21.
Russell 2000 index of smaller-company stocks rose 1.72, to 658.77.
NYSE: 2.71 billion shares, up from 2.67 billion on Wednesday. Advancers narrowly outnumbered decliners.
Nasdaq: 2.34 billion shares, up from 2.19 billion. Advancers outnumbered decliners 5 to 4.
Crude oil for December delivery: $61.78, up $2.03.
Gold for current delivery: $460.10 a troy ounce, down from $464.80 on Wednesday.