While the Fed raised interest rates a quarter percentage point to 4.25 percent today, the market was pleased by a revision to the central bank's economic assessment in which it no longer characterized its rate hikes as accommodative. That change was widely seen as an adjustment in Fed monetary policy.

Analysts had been expecting the Fed's decision — the 13th consecutive rate increase in 18 months — and many anticipate one more boost at outgoing Chairman Alan Greenspan's final policymaking meeting in January.

But recent reports of strengthening economic indicators now have some concerned that more increases could be in store, and that may have limited the market's advance following the Fed's midafternoon announcement. The Fed previously slashed rates to record lows to spur the economy, and has been gradually pushing them upward to battle inflation.

"At this point, it's difficult to see them stopping with one more (increase)," said Christoper Piros, investment strategist for Prudential's Strategic Investment Research Group. "There will almost certainly be two more. But I do think there is a risk they may have already gone far enough, if not too far."

Stocks wandered aimlessly for most of the session as the market weighed lackluster retail sales figures and mixed earnings news from electronics retailer Best Buy Co., computer maker Hewlett-Packard Co. and consumer products firm Procter & Gamble Co.

At the close of trading, the Dow Jones industrial average gained 55.95, or 0.52 percent, to 10,823.72. The Dow opened the session in negative territory and surged 103 points after the Fed announcement.

Broader stock indicators were ended higher. The Standard & Poor's 500 index rose 7.00, or 0.56 percent, to 1,267.43, and the Nasdaq composite index advanced 4.05, or 0.18 percent, to 2,265.00.

Bonds rose after the Fed's rate decision, with the yield on the 10-year Treasury note sliding to 4.52 percent from 4.55 percent late yesterday. The dollar was mixed against other major currencies in European trading, while gold prices pulled back from recent highs.

Oil prices were flat following a brisk runup yesterday as another snowstorm approached the Northeast, with a barrel of light crude adding 7 cents to settle at $61.37 on the New York Mercantile Exchange.

The Commerce Department said retail sales grew 0.3 percent in November, just missing estimates of 0.4 percent. Slowing sales at department and specialty stores roused concerns about the strength of the critical holiday shopping season.

However, the report did show that auto sales rebounded after a three-month decline, while gasoline sales fell as prices pulled back from record levels. Excluding autos, retail sales dropped 0.3 percent, the biggest loss in 19 months.

Separately, the department reported business inventories expanded by 0.3 percent last month, but that sales climbed 0.8 percent. A lower inventory-to-sales ratio urges companies to boost production and hiring.

Among the Dow industrials, support from P&G, Pfizer Inc. and Boeing Co. was limited by a disappointing update at HP, which also pulled down International Business Machines Corp.

P&G climbed $1.48 to $58.39 after raising its second-quarter profit target, citing better sales and less-than-expected costs from its acquisition of Gillette Co. News of quarterly dividend increases lifted Pfizer by $1.37 to $22.31, and Boeing by 40 cents to $70.59, off its all-time high of $70.94.

But those gains were countered when HP forecast its 2006 revenue and earnings just shy of Wall Street views. HP sank 90 cents to $29.07, and rival IBM fell $2.25 to $83.71.

In earnings news, Best Buy said its quarterly profit fell 7 percent, hurt by higher expenses that outpaced a 10 percent sales increase. Best Buy was down $5.90 at $43.94.

Lehman Brothers Holdings Inc. posted a steep 41 percent jump in quarterly earnings from strength in investment banking and transaction fees. Shares rose 33 cents to $128.50.

Travel services firm Cendant Corp. pegged its quarterly income at the low end of prior estimates because of weakness in its ticketing business, mostly its international online operations. Cendant dropped $1.83 to $16.55.

Taser International Inc. said the Securities and Exchange Commission has ended an investigation and will not impose any sanctions over the company's claims about the safety of its stun guns and an accounting error from last year. Taser jumped 92 cents to $7.04.

Advancing issues led decliners by 6 to 5 on the New York Stock Exchange, where volume of 1.78 billion topped the 1.41 billion shares that changed hands yesterday.

The Russell 2000 index of smaller companies lost 0.51, or 0.07 percent, to 689.03.

Overseas, Japan's Nikkei stock average lost 0.28 percent. Britain's FTSE 100 gained 0.10 percent, Germany's DAX index added 0.17 percent, and France's CAC-40 was higher by 0.43 percent.