Stocks rose Wednesday as a record leap in retail sales, headway in the war in Afghanistan and encouraging earnings news from Hewlett-Packard boosted investors' spirits.

The Dow Jones industrial average ended up 72.66 points, or 0.75 percent, to 9,823.61, while the Nasdaq composite edged up 10.96 points, or 0.58 percent, to 1,903.07. The Standard & Poor's 500 index rose 2.10 points, or 0.18 percent, to 1,141.19.

Hewlett rose 9.1 percent, or $1.85, to $22.08, after topping analysts' earnings estimates, but International Business Machines Corp. slumped ahead of an analysts' meeting.

Retailers like Home Depot Inc. rose after the government reported sales at retail stores grew at the fastest pace on record last month, helped by cheap financing for new cars.

The Commerce Department said total retail sales zoomed up by 7.1 percent, nearly triple the 2.7 percent jump that Wall Street analysts had forecasted.

"All in all it was reasonably encouraging in that it is showing a shopping proclivity can bode better than might have been expected for the Christmas season," said Richard Babson, chairman of Babson-United Investment Advisors, which manages $1.8 billion. "This shows there's a bit of willingness for consumers to continue spending."

Hopes for an economic bounce in 2002 have lifted stocks from lows hit in the wake of the terror attacks on the United States. Wall Street has been betting this year's slew of interest-rate cuts and a fat government stimulus package will spark an economic turnaround.

Meanwhile, the Taliban's hard-line Islamic rule was crumbling in Afghanistan, one day after U.S.-backed civil war rivals swept into the capital Kabul. But the United States stressed its main target remained Usama bin Laden — the suspect behind the Sept. 11 hijack attacks that killed about 5,000 people.

"If retail sales are up, that means the consumer is not hibernating and consumer confidence regarding the market is not falling,'' said Peter Cardillo, director of research at Westfalia Investments.

"The war factor also brings a change of heart in consumers' confidence in general and their confidence returning to the stock market.''

Hewlett's merger partner, Compaq Computer Corp., jumped $1.20 to $10, or 13.6 percent. Hewlett said it stood by its roughly $23 billion planned purchase of Compaq, which has run into opposition from the companies' founding families and outside investors.

IBM fell $2.76 to $113.94, pressuring the blue-chip Dow. The Dow component has climbed about 30 percent since its recent intraday low of $87.49 struck on Sept. 27. The world's largest computer maker is holding an analysts' meeting in New York after the market closes.

Home Depot Inc., rose $2.23 to $46.23 with other retailers on the strong retail sales report from the government before the bell. The Standard & Poor's retail index raked in a 1.80 percent gain.

A pullback in energy stocks as oil prices sank to two-year lows also hurt. That reflected the market's disappointment over oil cartel OPEC 's decision to make a 1.5 million barrel per day (bpd) cut in output dependent on non-OPEC action. Among the non-OPEC nations, Russia, the world's second biggest exporter, offered only a token 30,000 bpd cut.

Exxon Mobil Corp., the No. 1 U.S oil company, lost $1.80 to $38.70, or 4.4 percent, which put it among the biggest percentage losers on the 30-stock Dow. The Philadelphia oil services index plunged 8.68 percent to reflect losses among oil drillers such as Halliburton Co., down $1.40 to $21.60.

Newmont Mining Corp. sank $1.96 to $20.29. The company said it will buy Franco-Nevada Mining Corp. Ltd. and make an offer for Normandy Mining Ltd. in what analysts say is a $9.1 billion move to make Newmont the world's biggest gold producer.

Retailing giant Federated Department Stores Inc., the parent of Bloomingdale's and Macy's, said earnings before charges fell 38 percent, but shares rose more than 6.5 percent in part because the results met the higher end of estimates. Shares rose $2.28 to $37.11.

Data storage company Network Appliance Inc. posted results that were lower than a year ago due to weak technology spending and the economic downturn. Network fell $2.90 to $15.29, and rivals also moved lower including sector leader EMC Corp., off 40 cents to $15.55, Emulex Corp, down $1.76 to $26.74, and Brocade Communications, off 83 cents to $29.81.

Advancing issues outnumbered decliners 3 to 2 on the New York Stock Exchange. Volume came to 1.41 billion shares, ahead of the 1.35 billion shares traded Tuesday.

The Russell 2000 index, which tracks smaller company stocks, rose 4.48, or 1.0 percent, to 452.82.

Overseas, markets were mixed Wednesday. Japan's Nikkei stock average finished the day up 0.6 percent. France's CAC-40 closed up 0.2 percent, Britain's FT-SE fell 0.7 percent, and Germany's DAX index inched up 0.1 percent.

Reuters and the Associated Press contributed to this report.