Although oil prices rose 21 cents to $63.97 a barrel on the New York Mercantile Exchange after the Department of Energy reported crude inventories fell more than expected last week, investors remained optimistic that the recent drop in oil would boost consumer spending and corporate profits.

Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors, said he was encouraged by a rise in technology stocks as well as small-company stocks in recent days.

"Those are signs from the stock market that investors are willing to take more risk," he said.

The Dow rose 45.23, or 0.39 percent, to 11,543.32, reaching a new four-month high. The gains follow a more than 100-point rise in the blue chips yesterday based in part on optimism about oil prices and consumer spending.

Broader stock indicators also hit four-month highs. The Standard & Poor's 500 index rose 4.96, or 0.38 percent, to 1,318.07, and the Nasdaq composite index gained 11.85, or 0.53 percent, to 2,227.67.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.76 percent from 4.77 percent late yesterday. The dollar was mixed against other major currencies, while gold prices rose.

Johnson said that while investors are buying, many are looking to important economic data set to come this week. Tomorrow, the Commerce Department is scheduled to release its monthly retail sales report, which many on Wall Street view as an up-to-date snapshot of consumer spending behavior. Then, on Friday, the Labor Department is to release the consumer price index, the key measure of inflation.

"I think to some extent most investors want to wait and see these numbers," Johnson said, noting that investors are still trying to determine whether the economy will have a hard or soft landing.

"They still don't have an answer to that, although it's beginning to look more and more like a soft landing."

Wall Street is also awaiting the Sept. 20 meeting of the Federal Reserve to determine how the central bank sees the economy as well as how the Fed might act as it works to contain inflation. The Fed raised interest rates for 17 straight times over two years before pausing last month.

Investors appeared confident today that the Fed won't rattle the markets next week, said Neil Massa, equity trader at John Hancock Funds.

"The Fed-is-nearly-done rally should be over but it has its moments where it keeps coming back," he said, adding, though, that he is encouraged by the broad-based nature of the recent rally. The markets could face a setback, however, if the consumer price index shows inflation is increasing.

In the meantime, a trickle of favorable corporate profit news as well as easing oil prices have emboldened investors in recent days, with hopes growing that consumers will continue to reach into their wallets. Wall Street has been concerned recently that consumers would pull back amid falling housing prices, rising interest rates and increasing energy costs.

Strong profit news as the end of the third quarter nears could reassure investors.

Lehman Brothers Holdings Inc. rose $2.04, or 3 percent, to $70.06 after reporting a better-than-expected fiscal third-quarter profit despite a slowdown in its investment-banking business. A strong profit report yesterday from Goldman Sachs Group Inc. led brokerage stocks higher. Goldman rose $2.57 to $160.86.

Hewlett Packard Co., which hit a new 52-week high yesterday, came under pressure after California's attorney general warned that company officials involved in a scandal over leaks to the media could face criminal charges. The company announced yesterday that Patricia Dunn would step aside as chairwoman in January. She apologized for techniques used by private investigators in the inquiry, which delved into phone records of HP board members and reporters. HP fell 55 cents to $36.37.

Ford Motor Co. rose 13 cents to $9.19, after The Wall Street Journal reported the automaker would widen its restructuring plan by cutting white-collar costs by nearly one third.

Sears Holdings Corp. moved up $2.61 to $158.45 after the retailer approved plans to repurchase up to $500 million in stock.

The Russell 2000 index of smaller companies was up 6.22, or 0.86 percent, at 730.70.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.68 billion shares, compared with 2.89 billion traded yesterday.