Wall Street might have doubted him, but Alan Greenspan's soothing words were written all over the rally that shook stocks out of their two-week funk on Tuesday.

Consumer stocks rallied, financials stood still, and bond prices plummeted after the Conference Board's consumer confidence index rose to its highest level in two years. Broader market proxies had their best day in almost two months, with the S&P 500 gaining 1% to 1,094.83, the Nasdaq jumping 1.6% to 1,869.1 and the Dow crossing solidly above the symbolic 10,000 mark to 10,085.14.

Providing the first point of hard data for July after signs of weakness emerged in June, the confidence index jumped to 106.1 instead of declining slightly to 102, as forecast. Assuming the reading holds in upcoming measures of job creation and corporate purchases, it's good news for the enduring power of the economic recovery, and especially for stocks that sell goods to consumers.

Reflecting that, Wal-Mart ( WMT) added $1.25 to $53.90, eBay ( EBAY) gained $4.19 to $78.46, and Sears ( S) climbed $2.04 to $35.38.

To some skepticism , Greenspan predicted last week that June's economic softness "should prove short-lived." Investors who doubted the chairman's testimony before the Senate Banking Committee -- the S&P 500 made a small move that day -- found his view a lot more persuasive yesterday.

To be sure, the S&P 500 and Nasdaq were coming off lows for the year, and even many bearish analysts expected a bounce. But data embodied in the consumer confidence report -- a better-than-expected home sales reading for June and strong earnings from Verizon ( VZ) and Lockheed Martin ( LMT) -- drove the market higher; it wasn't just reflexive bottom-fishers.

And that's also likely why the big financials were left out of the general trend yesterday. Amid his confidence about the economy, Greenspan signaled that he expects to continue raising short-term rates for the foreseeable future at a measured pace. In the futures market, the yield on December eurodollar interest rate contracts rose to almost 2.5%, showing that traders expect about 1 percentage point more from Greenspan by year-end.

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