"The blowout numbers on retail sales are really making the bears go back to their statistical charts," said Alfred Kugel, senior investment strategist at Stein Roe Investment Counsel.
Retail sales jumped 1.2 percent in April for the largest monthly gain since October. Wal-Mart, the world's largest retailer, logged an almost 20 percent gain in quarterly profits and said it is still on track for a hefty rise in full-year earnings.
The Dow Jones Industrial Average leaped 189 points, or 1.9 percent, to 10,299. In two days, the Dow has advanced 359 points. The tech-heavy Nasdaq Composite jumped 66 points, or 4 percent, to 1,719. The Standard & Poor's 500 added 22.77 points, or 2.12 percent, to 1,097.33.
Investor sentiment got an added lift after a bullish investment call on Intel Corp., the world's largest maker of computer chips. Retailers, semiconductors and software helped push the market higher, adding to Monday's rally fed by hopes for solid earnings from companies like chip equipment maker Applied Materials Inc.
Volume also picked up, suggesting that investors were feeling more confident about stocks, but analysts were reluctant to predict the gains would last — noting Wall Street's rallies have a habit of fading.
"We're getting a nice follow-through from Monday, and it's good to see tech stocks doing well," said Ralph Acampora, director of technical research, Prudential Securities. "I'd love to say this is the beginning of something big, but that would be premature. This is a good short-term move."
Although the stock indexes have managed two significant rallies in the past week, skepticism remains strong. Much of the recent buying has been bargain hunting in response to weeks of selling on the market, including the selloff that followed a 305-point gain on the Dow and 122-point advance on the Nasdaq last Wednesday.
Still, the market's performance Tuesday raised hopes that conditions were improving, and that the market might have reached and now rebounded from a bottom.
"We're starting to see broader evidence of strength. Last week it was Cisco, Monday we got encouraging news from the chip sector and today it was retail sales," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "If this hold, I think it's important and suggests that we could add to these gains."