A late round of bargain-hunting sent stocks surging Thursday as oil prices retreated from their highs of the day and investors shrugged off sluggish retail sales and mixed economic data.

The Dow Jones industrial average (search) ended up 124.33 points, or 1.22 percent, at 10,292.79, according to the latest available figures. The Standard & Poor's 500 Index (search) rose 12.60 points, or 1.14 percent, at 1,118.51. The Nasdaq Composite Index (search) finished 23.03 points higher, or 1.24 percent, at 1,873.44.

Trading was paper-thin and investors were holding their collective breath as Hurricane Frances (search) took aim at Florida's eastern coast, less than three weeks after Hurricane Charley struck the state, pushing the nation's jobless claims higher and denting retail sales in the Southeast.

But the fact that the market rose in spite of so many negative factors was cause for some optimism, analysts said. Some saw it as a sign that investors were setting aside worries that kept many on the sidelines during the summer.

After rising more than a dollar, U.S. crude oil futures settled up just 6 cents at $44.06 a barrel. The drop came on a flurry of late-session profit-taking after oil gained nearly $2 on Wednesday.

"In my mind there's almost a direct correlation — crude sells off and the market lifts," said Mike Driscoll, Bear Stearns listed trader and managing director. "But there's extremely low volume and moves are exaggerated in either direction."

"Could it just be that there's no one in, volume is low, and there's nothing new negative?" asked Janna Sampson, director of Portfolio Management at Oakbrook Investments. "People might be thinking, 'You know, I want to be in for September, I want to do it today, and I'm taking a four-day weekend.

Home improvement stocks such as Home Depot Inc. (HD) and Lowe's Cos. Inc. (LOW) and specialty retailers like Gap Inc. (GPS) and American Eagle Outfitters Inc. (AEOS) contributed to the gains.

During regular trading bellwether technology company Intel Corp. (INTC) gained 20 cents to end up at $21.63. But shares tumbled below $20 in electronic trading after the closing bell when the world's largest chip maker cut its quarterly revenue outlook.

In economic news, worker productivity rose a disappointing 2.5 percent in the spring, the smallest gain since late 2002. The reading by the Labor Department (search), which measures the amount an employee produces for every hour on the job, missed economists' estimates for a rise of 2.8 percent, and was down sharply from the 3.7 percent pace posted in the first quarter.

In a second report, the department said the number of new people signing up for unemployment benefits rose for the second week in a row, reflecting the lingering impact of Hurricane Charley (search). Economists were expecting claims to go down.

Separately, orders to U.S. factories grew by 1.3 percent in July, following a 1.2 percent advance in June. The increase was led by a big jump in demand for commercial aircraft and parts. Orders for nondurable goods, such as food products and chemicals, rose 1 percent for a second straight month.

Home improvement stocks rose as the approach of Hurricane Frances to Florida and the U.S. mainland suggested sales could be helped in coming days. Home Depot Inc. rose $1.05 to $37.93 while Lowe's Cos. Inc. gained $1.87 to $52.05.

The nation's retailers reported a third consecutive month of weak sales, as low-to-middle income shoppers became more frugal in response to rising energy and grocery bills and growing worries about the job market.

Wal-Mart Stores Inc. (WMT), the world's largest retailer, was up 39 cents at $53.02 despite reporting a slim 0.5 percent increase in sales, missing Wall Street forecasts for a rise of 1.5 percent. Based on disappointing sales, Wal-Mart said it now believes third-quarter profits will be at the low end of its forecast.

Costco Wholesale Corp. (COST) was down 42 cents at $40.41 after reporting a 4 percent gain in sales, missing estimates of a 7.3 percent rise.

American Eagle gained 6.3 percent to $36.30 after the retailer raised its profit forecast, and the Gap rose $1, or 5.3 percent, to $20 after its same-store sales fell less sharply than Wall Street had expected.

Car makers General Motors Corp. (GM) and Ford Motor Co. (F) gained strongly as planned aggressive cuts to fourth-quarter production propelled the stocks higher, said Michael Ward, an analyst with CreditSights. GM rose $1.69 to $42.90, a 4.1 percent increase, while Ford rose 46 cents to $14.36, a 3.31 percent rise.

"It allows them to start 2005 with a fresh slate," Ward said. "What the market was kind of relieved about is that at least they acknowledged they have a problem."

Trading was light, with 1.1 billion shares changing hands on the New York Stock Exchange (search), below the 1.4 billion daily average for last year. About 1.2 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year. Advancers outnumbered decliners on the NYSE and Nasdaq by about 2 to 1.

Volume has been light this week on Wall Street as many investors were out of New York on vacation or avoiding commuting problems caused by the Republican convention.

The Russell 2000 index, which tracks smaller company stocks, was up 7.32, or 1.3 percent, at 559.78.

Overseas, Japan's Nikkei stock average finished 0.2 percent higher Thursday. In Europe, France's CAC-40 added 0.6 percent, Britain's FTSE 100 rose 0.4 percent and Germany's DAX index was up 0.4 percent.

Reuters and the Associated Press contributed to this report.