"Yesterday seemed to take people by surprise," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore.

Retail sales reports, rising oil prices and mixed economic news capped the day's gains.

"The last week of the year is coming in pretty lame" for retailers, said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago. A third month of disappointing sales from American automakers added to the sense that consumer spending may be slowing.

Crude oil futures crossed $63 a barrel, further cooling investor enthusiasm. A barrel of light sweet crude settled at $63.42, up 28 cents in trading on the New York Mercantile Exchange.

According to preliminary calculations, the Dow Jones industrial average rose 32.74, or 0.3 percent, to 10,880.15. The Dow rose 129.91, or 1.21 percent, yesterday.

Broader stock indicators were higher. The Standard & Poor's 500 index rose 4.66, or 0.37 percent, to 1,273.46. The tiny gain was enough to send the index to a four-and-a-half year high. The Nasdaq composite index rose 19.72, or 0.88 percent, to 2,263.46, reflecting a $10.01 jump in Google Inc. after Bear Stearns upgraded the stock.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.35 percent from 4.37 percent late yesterday. The U.S. dollar was lower against other major currencies. Gold prices were higher.

Investors remain uncertain about the transfer of power at the Federal Reserve, as Alan Greenspan retires and Ben Bernanke takes his place.

"It's like we're all waiting for something to start," said Frank Gannon, senior equity portfolio manager, AIG SunAmerica Mutual Funds.

The day's scant economic news was mixed. While November orders to U.S. factories posted their biggest gain in three months, the increase came entirely from higher demand for commercial aircraft. Without transportation, orders were essentially unchanged, the fourth month of the past five that this broad category of the economy's health has either fallen or shown no growth.

Traders are quietly cheering for a minor economic slowdown, in the hopes that it will bring a quicker end to the Federal Reserve's interest rate hikes. The Fed has raised short-term interest rates 13 straight times in the past year-and-a-half.

Upgrades helped ExxonMobil Corp. and Google. Banc of America upgraded ExxonMobil to "buy" from "neutral." ExxonMobil rose 10 cents to $58.57. Bear Stearns raised Google to "outperform" from "peer perform" and put a price target of $550 on the stock. The stock also got a boost from a news report that it would sell a $200 computer at Wal-Mart Stores Inc. Google rose $10.01 to $445.24.

Ford Motor Co. rose 18 cents to $8.01 after it said it will announce details of its restructuring plan, including job cuts and plant closures, on Jan. 23. Ford's plan has been the subject of much speculation since Ford Chairman and CEO Bill Ford said this fall the automaker was working on its second major North American restructuring in four years. Under the first plan, launched in January 2002, Ford cut 35,000 jobs and closed five plants.

Insurer Aetna Inc. said John W. Rowe will step down as chief executive next month and named president Ronald A. Williams to replace him. Aetna rose 36 cents to $94.42. In a statement, Rowe said he had told Aetna's board some time ago that he wanted to retire when his employment contract expires this year. "As a result of a very thorough succession planning process, we decided that naming Ron Williams CEO early in the year would provide for an orderly transition," Rowe said .

Estee Lauder Cos. rose $1.66 to $35 as the maker of cosmetics and personal-care products was added to the S&P 500 index. After the markets closed yesterday, Standard & Poor's replaced Mercury Interactive Corp. with Estee Lauder in the benchmark S&P 500 Index.

Boyd Gaming Corp. fell $2.31 to $46.09 after it said it plans to tear down the old Stardust casino and build a $4 billion hotel and casino complex on 63 acres of the Las Vegas Strip — one of the largest such developments planned in a town known for mega projects.

The Russell 2000 index of smaller companies rose 5.20, or 0.76 percent, to 689.25.

Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange, where volume was 1.91 billion shares, up from 1.11 billion at the same time yesterday.

Overseas, Japan's Nikkei stock average rose 1.55 percent. Britain's FTSE 100 rose 0.58 percent, Germany's DAX index gained 1.15 percent, and France's CAC-40 rose 1.29 percent.