Wall Street: Thursday close

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The retail sales figures fuelled hopes that the long-awaited recovery in company prospects is near.

But shares' gains were limited, amid lingering concerns that prices - buoyed by a strong rally since March - have run ahead of events.

'It seems clear to me this economy will accelerate and earnings growth is going to be good,' said Scott Wren, equity strategist for AG Edwards & Sons. 'But we've had a lot of talk that in the second half of the year we'll finally see some big earnings and economics numbers. There's still concern the second half won't pan out the way many people thought.'

The Dow Jones Industrial Average closed up 64.71, or 0.7%, at 9126.45. The tech-heavy Nasdaq slipped 0.5 to 1652.18.

Wal-Mart rose $1.26 to $57 after it reported strong sales and raised its second-quarter earnings forecast. Pundits credited warm weather and price-cutting for the increase in retailers' sales.

Decliners included consumer lender Americredit, which dropped $1.20 to $6.60, after warning full-year profits would be less than the market had expected.

Intel fell 15 cents to $23.99. The Internal Revenue Service has raised the chipmaker's tax liability by about $600m following a review of the returns in 1999 and 2000.

Economic news was upbeat. Business productivity grew at a surprisingly strong annual rate of 5.7% in the second quarter, the best showing since fall 2002 and more than double the rate in the first-quarter.

Jobless claims fell to a six-month low of 390,000 for the work week ending 2 August. It was the third week in a row that claims were below 400,000, a level associated with a tepid job market.

'Recent signs show the economic data is starting to improve,' said Michael Sheldon, chief market strategist at Spencer Clarke LLC. ' As long as that continues, chances are the pullback (in share prices that) we've been experiencing will be somewhat brief and lead to further equity gains in the latter half of the year.'