Solid earnings from Best Buy Corp. and Lehman Brothers Holdings Inc. also supported the gains.

Investors who had waited anxiously for the Labor Department's inflation report were pleased by the 0.6 percent drop in the Producer Price Index. Economists had forecast an 0.2 percent decrease. But May retail sales data, reported by the Commerce Department, fell a disappointing 0.5 percent, more than the 0.2 percent analysts expected.

The mixed economic data implies "that the Federal Reserve may continue to raise short-term interest rates at a measured pace, but they may pause periodically," said Hugh Johnson, chief investment officer at Johnson Illington Advisors. "That's good news for the economy, for earnings and stock prices."

The Dow Jones industrial average rose up 25.01, or 0.24 percent, at 10,547.57 after rising just under 10 points on yesterday.

Broader stock indicators also gained ground. The Standard & Poor's 500 index was up 3.09, or 0.26 percent, at 1,203.91, and the tech-heavy Nasdaq composite index climbed just 0.08, nearly flat, to 2,069.04. The Nasdaq was lower most of the session as investors took profits in the recently active technology sector.

Bonds sold off as stocks rose, with the yield on the 10-year Treasury note rising to 4.11 percent from 4.09 percent late yesterday. The dollar was mixed against other major currencies, and gold prices fell.

Crude oil futures dropped modestly after reaching a seven-week high yesterday, but prices remained around $55 per barrel as investors awaited pricing and production news from OPEC from its regular meeting and from the U.S. inventory report, both coming tomorrow. A barrel of light crude settled at $55.00, down 62 cents, on the New York Mercantile Exchange.

While crude oil prices remain unusually high, the Producer Price Index showed that higher gasoline prices were not feeding inflation — fears of which weighed heavily on the markets earlier in the year. However, with retail sales declining, investors worried that the high energy costs were instead eating into consumers' disposable income.

That left the indexes unable to stage a major advance, though stocks managed to add to yesterday's meager gains. But investors had been hoping that this week's raft of economic data would provide the necessary impetus to lift stocks further. Now, however, investors may be holding off until the end of the quarter before making any large bets on stocks.

"People are coming up with excuses not to do anything; they want to have everyone close their second quarter books then wait until July to see what the earnings reports are," said Paul McManus, senior vice president and director of research at Independence Investment LLC. "Should earnings be a little better than expected, as they were in the first quarter, then that would move the market up."

Despite difficult market conditions that have led many Wall Street firms to issue warnings about their second-quarter earnings, Lehman Brothers said its results rose 12 percent on the strength of its investment banking and fixed-income trading. Lehman, which beat Wall Street profit estimates by 4 cents per share, rose $3 to $96.05.

Best Buy surged 14.7 percent, or $8.68, to $67.40 after it said strong sales of MP3 music players, digital televisions and video games boosted its first-quarter earnings dramatically. The retailer beat analysts' profit estimates by 21 cents per share and raised its fiscal 2006 earnings forecasts by 15 cents per share.

Dow industrial General Motors gained $1.42 to $35.87 after the Detroit News reported that the struggling automaker was seeking benefit concessions from auto workers. Rival Ford Motor Co. added 30 cents to $10.82 as it announced a spinoff and public stock offering of its Hertz Corp. auto rental subsidiary.

Drug maker Mylan Laboratories Inc. announced a $1.25 billion stock buyback, worth up to 25 percent of the company's outstanding stock. The company also increased its 2006 and 2007 profit forecasts. Mylan climbed $1.88 to $19.58.

Advancing issues outnumbered decliners by more than 5 to 3 on the New York Stock Exchange, where preliminary consolidated volume came to 1.71 billion shares, compared with 1.65 billion traded yesterday.

The Russell 2000 index of smaller companies was up 5.37, or 0.8 percent, at 634.39.

Overseas, Japan's Nikkei stock average rose 0.22 percent. In Europe, Britain's FTSE 100 was down 0.07 percent, France's CAC-40 dropped 0.14 percent, and Germany's DAX index lost 0.16 percent in late trading.