Stock indexes edged higher Tuesday after the previous day's big declines. Strong participation from buyers at a bond sale backing Europe's bailout fund and at an auction of Spanish government debt helped reassure investors.
Spain was able to sell short-term debt at much lower interest rates compared with a month ago, a signal that markets are becoming less fearful about the government's ability to repay its debt.
In its first sale of short-term bills, the European Financial Stability Fund raised €1.9 billion ($2.6 billion) from investors at an average rate of 0.22 percent. That's below the rate Germany pays for the similar bills. "This is an amazing success," Carl Weinberg, chief economist at High Frequency Economics, wrote in a note to clients.
The Dow Jones industrial average rose 69 points, or 0.6 percent to 12,090 as of noon (1700 GMT). The Dow sank 162 points the day before after Moody's and Fitch said the fiscal agreement reached last week among European leaders fell far short of what was needed to contain that region's debt crisis.
The Commerce Department reported Tuesday that retail sales rose for the sixth straight month in November. Sales increased just 0.2 percent, below what analysts had expected. But the government also revised the previous month's slightly higher. That was the encouraging part, said Tim Hoyle, director of research at Haverford Investments. "It reassures you that the economy is going in the right direction," Hoyle said.
Energy companies led the market higher as crude oil rose back above $100. Both Exxon Mobil Corp and Chevron Corp. rose 1.9 percent. Drugmaker Pfizer added 2.3 percent, the most of the 30 companies in the Dow. Pfizer said it plans to buy back up to $10 billion of its own stock.
The Standard & Poor's 500 index rose 6 points, or 0.5 percent, to 1,243.
The Nasdaq composite lost less than 6 points, or 0.2 percent, to 2,618.
The Vix, a measure of stock market volatility, fell to 24 and has now dropped 10 percent in December. The index remained above 30 from early August until last week. Hoyle said a sustained fall in the Vix usually is followed by a rise in stock prices. The recent trend "sets us up for a little Santa Claus rally between now and the end of the year."
Urban Outfitters jumped 6 percent, the most in the S&P 500 index, after the retailer said its sales were rising faster than analysts were expecting. The Philadelphia-based company owns Urban Outfitters stores, Anthropologie and Free People.
Sprint Nextel Corp. rose 5 percent as it looked like its rival AT&T Inc. would be unable to pull off an acquisition of T-Mobile USA. Sprint agreed to drop a lawsuit against AT&T now that the deal appears to be in jeopardy. Sprint had been lobbying to stop it.
Electronics retailer Best Buy plunged 11 percent. The company said its third-quarter income sank 29 percent as it cut prices on tablets and TVs to drive sales and traffic during the busy holiday season.
The yield on the 10-year Treasury note rose to 2.04 percent from 2.02 percent as demand for ultra-safe investments ebbed.