But that optimism was kept in check because of fresh concerns about Europe. German investor confidence fell sharply in September, and industrial production unexpectedly stagnated during July in the countries that use the euro.
In other signs that investors remain cautious, gold climbed to another record and Treasury prices rose, sending interest rates lower.
The Dow Jones industrial average rose less than 1 point in afternoon trading. If the Dow closes the day higher, it would be the ninth rise in the average in the past 10 days. September has been a historically poor month for stocks, but so far the market has bucked that trend. The Dow is up more than 5 percent so far this month, its best start to September since 1939.
The Commerce Department said Tuesday that retail sales rose in August at their fastest pace in five months and slightly beat forecasts. The modestly higher growth is in line with economic reports over the past two weeks indicating that the economy continues to expand, though at a sluggish pace.
Retailers including Macy’s Inc. and J.C. Penney Co. rose after the retail sales report. Electronics retailer Best Buy Co. also jumped after reporting income that easily topped forecasts and raising its full-year outlook.
Signs of modest growth have been enough to get traders to put more money into stocks in September. However analysts caution that the gains have come amid very light volume, a sign that many investors aren’t participating in the market and may still be skeptical about how well the economy is doing.
The primary question investors are still struggling with is, “does the economy just muddle along?” asked Michael Sheldon, chief market strategist at RDM Financial Group. He predicted the economy is more likely to continue to grow slowly than fall back into recession.
In another encouraging sign on the economy, business inventories jumped in July by their largest amount in two years and business sales rebounded after two months of declines. The upturn followed months of weak sales as people remain worried about keeping their jobs.
The Dow rose 0.15, or less than 0.1 percent, to 10,544.43 in afternoon trading.
The Standard & Poor’s 500 index rose 0.64, or 0.1 percent, to 1,122.54, while the Nasdaq composite index rose 7.65, or 0.3 percent, to 2,293.36.
Rising stocks were about even with those that fell on the New York Stock Exchange, where volume was 520.3 million shares.
Bond prices rose, driving down interest rates. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.68 percent from 2.75 percent late Monday. Its yield is used as a gauge to set interest rates on mortgages and other consumer loans.
Gold hit a new record earlier in the day, climbing as high as $1,276.50 an ounce, before settling at $1,271.70 an ounce.
European stock indexes rebounded after initially falling on the German and European economic reports. Britain’s FTSE 100 rose less than 0.1 percent, while Germany’s DAX index gained 0.2 percent. France’s CAC-40 rose 0.2 percent.
The Japanese yen hit another 15-year high against the dollar, which is bad for Japanese exporters. Japan’s Nikkei stock average fell 0.2 percent, getting the global trading day off to a sluggish start.
Macy’s rose 73 cents, or 3.5 percent, to $21.78, while J.C. Penney climbed $1.71, or 7.7 percent, to $24.04. Best Buy jumped $2.14, or 6.2 percent, to $36.79.