In a shortened session after Thursday's Thanksgiving Day holiday, the Dow Jones Industrial Average rallied 102.43 points (1.17 per cent) to close at 8,820.04 - the fifth consecutive gain for blue chips.

The Nasdaq composite managed a rise of 3.47 points (0.23 per cent) to 1,535.57 and the Standard & Poor's 500 broad-market index advanced 8.56 points (0.96 per cent) to 896.24.

With no economic news driving Wall Street, stocks extended a rally that pushed up the market by more than 10 per cent in the past few sessions.

Mr Andrew Busch at BMO Capital Markets said the attacks in Mumbai underscored the fragile geopolitical situation and initially pressured the market.

'The markets appear to be saying that they are worried, but not excessively so,' he said.

Mr Al Goldman at Wachovia Securities said the market is testing whether selling pressures have been exhausted and if the rally can hold.

'We believe the economic news will remain very negative well into 2009,' he said. 'If the stock market can show cumulative buying despite bad data, the market would be saying it has discounted the economic and credit market problems.'

Much of the market's attention was focused on the retail sector with Americans kicking off the holiday shopping season - a period critical for retailers and the economy, with consumers under duress from the economic malaise.

Macy's, one of the leading department store chains, rose 5.55 per cent to US$7.42. Best Buy dropped 1.76 per cent to US$20.71 and Amazon.com declined 2.87 per cent to US$42.70.

Citigroup extended its rebound after a weekend government rescue of the banking giant, rising 17.59 per cent to US$8.29. Fellow banking group JPMorgan Chase added 3.40 per cent to US$31.66.

In the auto sector, General Motors climbed 8.94 per cent to US$5.24 and Ford surged 25 per cent to US$2.69 as hopes rose for a congressional aid package for the ailing Detroit giants.

Yahoo leapt 8.5 per cent to US$11.47 on news that billionaire raider Carl Icahn had boosted his stake in the Internet group to 5.4 per cent following the departure of chief executive Jerry Yang.

Oil stocks were pressured by weaker crude prices. ExxonMobil lost 0.91 per cent to US$80.15 and ConocoPhillips shed 3.92 per cent to US$52.52.

Bonds pushed to fresh highs amid signs of easing credit conditions. The yield on the 10-year US Treasury bond dropped to 2.957 per cent from 3.001 per cent on Wednesday and that on the 30-year bond eased to 3.487 per cent against 3.563 per cent. Bond yields and prices move in opposite directions. -- AFP