Stocks advanced moderately in light trading Tuesday as a rise in bond prices and a drop in oil prices helped offset a lackluster report on holiday retail sales.
With little in the way of corporate or economic news to influence trading, Wall Street focused on other markets, so the uptick in bonds lent support to stocks. The 10-year bond was little changed, with its yield flat at 4.60 percent from Friday; there were more substantial gains in longer-term Treasuries.
Oil prices fell sharply after a slight advance earlier in the session. Investors brushed off concerns about Iran's reaction to tough United Nations sanctions designed to curtail the country's nuclear program. A barrel of light sweet crude fell $1.17 to $61.24 in trading on the New York Mercantile Exchange.
Retailers were also influencing major stock indexes. An early projection of holiday spending between Thanksgiving and Christmas showed a disappointing 6.6 percent rise over last year, according to MasterCard. Sales during the same period last year climbed 8.7 percent.
Trading volume is expected to remain light this week as many investors are on vacation, which tends to skew price moves and make them appear more dramatic than they perhaps are. European stock markets remain closed for extended Christmas holidays, while stock prices in Tokyo hit a seven-month high.
"We're seeing lower oil prices being a minor catalyst for the market," said Joe Ranieri, managing director of equity trading for Canaccord Adams. "Other than that, you're just seeing a quiet week with added volatility."
In midday trading, the Dow Jones industrial average rose 38.05, or 0.31 percent, to 12,381.27.
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 4.13, or 0.29 percent, to 1,414.89, and the Nasdaq composite index was up 7.57, or 0.32 percent, at 2,408.75.
The advance helped secure the likelihood that all three indexes might finish the year with double-digit gains. The Dow is up 15.5 percent in 2006, the S&P has risen 13.3 percent, and the Nasdaq is up 9.2 percent.
The dollar was mixed against other major currencies, while gold prices rose in response to tensions over Iran.
Neil Massa, a trader with John Hancock Funds, said the market's "moves are mostly energy based." Helping to lead the Dow higher was Exxon Mobil Corp., which was awarded a contract by Libya's state-run National Oil Corp.
Exxon Mobil rose 56 cents to $75.96. Chevron Corp. added 42 cents to $73.15, while ConocoPhillips was up 32 cents to $71.37.
Independent oil and gas producer Anadarko Petroleum Corp. said it plans to sell two gas fields in Louisiana to EXCO Resources Inc. for $1.6 billion. The company is selling assets to cut its debt level after it spend $22.5 billion earlier this year to buy rivals Kerr-McGee Corp. and Western Gas Resources.
Shares of Anadarko rose 55 cents to $42.69.
Gold companies rose along with the price of the metal. Miner Entree Gold Inc. rose 15 cents, or 10.3 percent, to $1.66, while Crystallex International Corp. rose 24 cents, or 6.6 percent, to $3.88.
The possibility of lower-than-expected sales during the holidays put a dent in retail stocks. Wal-Mart Stores Inc., the world's largest retailer, rose 28 cents to $45.82 after being down most of the session. Rival Target Corp. fell 37 cents to $56.95, and electronics chain Best Buy Co. shed 68 cents to $49.25.
Microsoft Corp. rose despite a report from computer security experts that the company's newly released operating system, Windows Vista, contains potentially serious flaws. The stock rose 5 cents to $29.69.
Shares of Goodyear Tire & Rubber Co. rose 45 cents to $20.17 after it reached a tentative deal with the United Steelworkers union to resolve an 11-week dispute over health care and plans to close a factory in Texas.