NEW YORK - US shares rallied Monday as investors appeared soothed by another Federal Reserve cash injection into the financial system and a better-than-expected retail sales report.
The Dow Jones Industrial Average was up 74.38 points (0.56 percent) at 13,313.92 around 1530 GMT and the Nasdaq composite gained 14.67 points (0.58 percent) at 2,559.56.
The broad-market Standard & Poor's 500 index rose 9.78 points (0.67 percent) to 1,463.42.
On Friday, Wall Street shares closed mostly lower, with the Dow down 0.23 percent, the Nasdaq 0.45 percent and the S&P 500 ending virtually flat, up 0.04 percent.
Wall Street opened Monday amid a rebound in global stock markets after last week's rout over credit fears linked to the troubled US housing sector.
"Foreign markets were up overnight, which we believe will lead to a bottom in our market," said Al Goldman, chief market strategist at AG Edwards.
Sentiment brightened after the Federal Reserve injected a further two billion dollars into the financial system and said it was ready to do more if necessary.
On Thursday and Friday, the Fed injected tranches totaling 62 billion dollars into the financial markets to ease tightening credit linked to the crisis in the US subprime mortgage sector.
"The global financial markets should continue to settle down now that global central banks have shown their intent to inject enough liquidity into the banking system to insure the free flow of money between major financial institutions throughout the world," said Frederic Dickson, chief market strategist of DA Davidson.
"This doesn't mean that current problems with mortgage-related credit have disappeared. Conditions in the mortgage credit market will probably worsen before its get materially better," he warned.
Europe's main stock markets were posting robust gains after suffering huge losses last week, while Asian markets closed mostly higher in a cautious consolidation after central banks moved to bolster confidence in the financial markets following last week's rout.
The European Central Bank also acted Monday, injecting 47.66 billion euros (65.06 billion dollars) into the money market to address liquidity shortages amid growing fears about the US home loan sector. On Thursday and Friday it had added a combined 155.85 billion euros (212.98 billion dollars) to eurozone markets.
The first report on US retail sales for the third quarter also provided a bright spot for investors. Retail sales, a major driver of economic growth, rebounded 0.3 percent in July, the Commerce Department said Monday.
The headline number was slightly higher than most analysts' forecasts of a 0.2 percent rise.
And June's retail sales numbers were revised to reflect a slightly better outlook. The government said it had revised June retail sales fell 0.7 percent, down from an initial estimate of 0.9 percent.
"For now, the fundamentals supporting consumer spending still look fairly solid," said Brian Bethune, US economist at Global Insight.
Financial sector stocks, which were pummeled last week in the credit turmoil, regained momentum. Bear Stearns rose 2.47 percent to 112.92 dollars and Merrill Lynch was up 0.70 percent at 74.64 dollars.
Goldman Sachs added 1.08 percent at 182.45 dollars. The Wall Street bank said it had orchestrated a three-billion-dollar bailout of a hedge fund it manages.
On the downside, Citigroup dipped 0.13 percent to 47.06 after the Financial Times in London reported over the weekend that the bank has lost more than 700 million dollars in credit business in recent weeks.
Private equity group Blackstone jumped 5.93 percent to 26.78. The firm, which had an initial partial listing on Wall Street in June, said earnings more than tripled in the second quarter, to 774.4 million dollars.
Investors fled the bond market as stocks rose. The yield on the 10-year Treasury bond climbed to 4.812 percent from 4.776 percent Friday and that on the 30-year Treasury bond rose to 5.025 percent from 5.005 percent.

08/13/2007 16:03 GMT