The Dow Jones Industrial Average rose 62 points to 13,357, as 28 of its 30 components advanced, led by Alcoa Inc. , Boeing Co. , and Disney .
The S&P 500 index gained 6.3 points to 1,499, while the Nasdaq Composite rose 9.3 points to 2,559.
Trading volumes showed 233 million shares exchanging hands on the New York Stock Exchange and 313 million trading on Nasdaq. Gaining issues topped decliners by 20 to 9 on the NYSE and by 14 to 11 on the Nasdaq.
Bond yields peak?
Investors are continuing to eye Treasury yields, which fell despite the strong retail sales data. Some analysts believe that yields have peaked and that this is a good time for investors to start buying bonds.
"I think we are getting pretty close to a peak in bond yields," said Peter Cardillo, chief market economist at Avalon Partners. "We are at levels not seen in five years. Of course, yields could inch up a bit more, if we get more negative news about inflation."
Stocks sold off on Tuesday, with the Dow Jones industrials taking a triple-digit decline, as the benchmark yield hovered near the 5.25% level of the fed funds rate. Higher rates drive up borrowing costs for individuals and companies, threatening an economy that already slowed significantly in the first quarter.
Higher yields could also slow the recent private equity binge and worsen the sub-prime lending crisis.
But after selling off since last week, bonds seemed to be finding their footing. The benchmark 10-year Treasury bond rose 17/32 to 94 14/32, yielding 5.23%.
T.J. Marta, fixed income strategist at RBC Capital Markets, told MarketWatch that an Asian buyer placed a large order for 30-year bonds, inspiring buying across the yield curve.
The stabilization in bonds, meanwhile, allowed the stock market to rally on news of a jump in retail sales and stronger-than-expected import prices in May. Stronger economic data of late had pressured bond prices, lifting yields.
Tetail sales jumped 1.4% in May, the largest gain in over 16 months, the Commerce Department reported. Economists polled by MarketWatch had expected a 0.7% increase.
Separately, the Labor Department said prices of imported goods rose 0.9% in May, as imported gas prices shot up 2.7% Economists surveyed by MarketWatch were expecting import prices to rise by 0.2% in May.
The Beige Book survey of regional economies is due at 2 p.m. Eastern.
Stocks on the move
Shares of Walt Disney Co. rose after completing the sale of its ABC Radio unit to Citadel for $1.35 billion.
Goldman Sachs and Blackstone Group are offering $11.4 billion for Biomet .
Jones Apparel is close to a deal to sell Barneys New York to the Dubai government, according to The New York Post.
The dollar rallied, touching a four-month high against the yen and an 11-week high against the euro after the retail sales data.
Gold continued to back lower in the early going, dented by the stronger dollar. The front-month August contract fell $1 to $652.10 an ounce.
Crude oil futures also fell, with a barrel recently losing 28 cents to $65.07.
By Nick Godt