Wal-Mart raised its sales projection for June to the highest level since May 2004. That means "2 percent of the economy is coming out and saying their sales are better than forecast," said John Lynch, chief market analyst at Evergreen Investments. "That's the best news of the day."

Investors also latched on to the strongest increase in factory orders in 14 months. Although most of the gain reflected demand for airplanes and parts, the data also indicated that June orders may have been stronger than May.

The Dow Jones industrial average rose 68.36, or 0.75 percent, to 10,371.80.

Broader stock indicators were also higher. The Standard & Poor's 500 index gained 10.55, or 0.88 percent, to 1,204.99, and the Nasdaq composite index rose 21.38, or 1 percent, to 2,078.75.

Stocks may be helped by "a developing consensus on Wall Street that the market is poised to have a better second half of the year," said Tim Connors, chief investment officer for value equities at Delaware Investments in Philadelphia. Investors are predicting the end of the Federal Reserve's yearlong run of interest rate hikes and a move by international central banks to stop increasing interest rates, he said.

Bonds declined, with the yield on the 10-year Treasury note rising to 4.10 percent from 4.04 percent late Friday. The dollar hit a 13 1/2 month high versus the euro, but retreated after that. Gold prices were higher.

Wal-Mart's news was particularly comforting to Wall Street because the retailer and a number of other discounters had partly attributed sluggish sales gains to higher gas prices that limited consumers' ability to spend on non-necessities. The upbeat outlook allowed investors to shrug off oil's higher price.

Crude oil futures rose on persistent fears that the heating oil supply would run short this winter and that aging refineries will have to push production levels to the limit. A barrel of light crude settled at $59.59, up 84 cents, on the New York Mercantile Exchange.

Stocks fell in recent sessions as crude hit new highs, but some analysts say investors are putting too much emphasis on oil prices.

"Energy is 10 percent of business costs," Lynch said. "Wages are a bigger concern; they're 70 percent of business costs." Investors who watch wages closely for signs that they're on the upswing are waiting for labor cost data in the second-quarter productivity report, which will be issued in late July.

Wal-Mart was up $1.52, or 3.15 percent, at $49.80. Other retailers gained on the news; J.C. Penney Co. Inc. rose 94 cents to $54.05, and Gap Inc. rose 44 cents to $20.26.

In other company news, Merck & Co. rose 4 cents to $31.10 after a judge declined to postpone jury selection in the nation's first state-level wrongful death trial related to painkiller Vioxx. Merck had argued that it couldn't receive a fair trial if the Texas if the case begins as scheduled. The judge said he would examine questionnaires answered by 100 potential jurors next week before making a final decision on delaying the trial.

General Motors Corp. gained 15 cents to $34.80 after saying it would extend its employee discounts offered to all buyers through Aug. 1. The incentives took GM's June sales to their highest monthly level in 19 years. DaimlerChrysler AG fell 38 cents to $40.10 after the company denied rumors it would issue a profit warning for the second half of the year and said its Chrysler division will offer a similar deal to the GM discount.

Carpet and flooring company Mohawk Industries Inc. said yesterday it would pay $2.6 billion for Unilin Holding NV, a leading maker of laminate flooring based in Belgium. Mohawk's brands include Karastan, Ralph Lauren, Lees, Bigelow, Dal-Tile and American Olean. Mohawk rose $5.30 to $87.50.

The Russell 2000 index of smaller companies rose 10.19, or 1.6 percent, to 653.23.

Advancing issues led decliners 2 to 1 on the New York Stock Exchange, where consolidated volume came to 1.85 billion shares, compared with 1.62 billion at the same point Friday.

Overseas, Japan's Nikkei stock average fell 0.30 percent. Britain's FTSE 100 was up 0.11 percent, Germany's DAX index was down 0.43 percent, and France's CAC-40 was down 0.28 percent.