Stocks Fight Off U.K. Scare

Ahead of the market's open, the Commerce Department said retail sales rose 0.3% in August. Economists, however, had expected a 0.5% increase. Excluding autos, retail sales unexpectedly fell 0.4% last month, compared with forecasts of a 0.2% rise.

Ian Shepherdson, chief economist with High Frequency Economics, said the data weren't a disaster, but that the spending trend is clearly slowing.

"What matters now is the extent of any fall rebound," said Shepherdson. "Lower confidence and the accelerating housing collapse will hurt."

At the same time, the Labor Department said its import price index slipped 0.3% last month, the first decline in eight months, as petroleum prices fell 1.3%. Economists, though, expected the index to fall 0.4%.

Elsewhere on the economic front, the Federal Reserve said industrial production rose 0.2%, slightly below expectations, while capacity utilization was flat at 82.2%.

Meanwhile, the University of Michigan said its consumer sentiment index inched higher to a reading of 83.8 this month from 83.4 in August, matching estimates.

"This is very positive market activity now that we've gotten some numbers out of the way," said Mendelsohn. "It's good the market keeps coming back. We're not giving back much of the gains we got, so that's good news. It's all about the Fed meeting next Tuesday now. People may also be positioning against options expiration next week, so there's going to be volatility."

U.S. Treasury prices were steady following the data. The 10-year bond rose 1/32 in price, yielding 4.46%. The 30-year note added 3/32, yielding 4.72%.

The major averages finished the five sessions with big gains. The Dow rose 2.5%, the S&P 500 gained 2.1%, and the Nasdaq ended up 1.6%.