Wall Street stocks rallied at the close yesterday as signs of slowing US retail activity held out the hope of only modest inflation.

Major indices had hovered near opening levels most of the day, handcuffed by fears this week's remaining reports might jolt the market.

But the Dow Jones industrial average added 47.34 points to close at 5,481.93, bolting higher in the mid afternoon after slipping into negative territory several times in the session.

The rally came shortly after a reading on national retail activity showed that sales fell from June's levels in the first three weeks of July.

That news supplemented earlier indications of moderation in the US economy, which helped bonds and sent long tend interest rates lower.

The government reported that employment costs - a key element of inflation - increased 0.8% in the second quarter, slightly less than expected.