NEW YORK (CNN/Money) - U.S. stocks surged Tuesday morning after a better-than-expected retail sales report seemed to reassure investors about the strength of the nation's economy.

Also giving a lift to tech stocks was a brokerage upgrade of chipmaker Intel.

At 9:55 a.m. ET, the Nasdaq composite index 45.73, or nearly 3 percent, to 1,698.27. The Dow Jones industrial average added 117.14 to 10,226.80. The Standard & Poor's 500 gained 13.46 to 1,088.02.

Retail sales surged in April, the government said, indicating that consumer spending continues to power ahead, even as other economic indicators have eased a little of late. Sales rose 1.2 percent, versus a gain of 0.1 percent the previous month and well above the 0.6 percent gain expected by economists. Excluding volatile auto sales, retail sales were up 1 percent compared with a rise of 0.3 percent in the previous month.

"Every time you see another indicator that they (consumers) are still spending, that's encouraging," Bill Cheney, chief economist at John Hancock Financial Services, told CNNfn's CNNmoney Morning.

In corporate news, shares of Intel (INTC: up $1.29 to $29.81, Research, Estimates) got a boost after brokerage Robertson Stephens upgraded the No. 1 chipmaker to "buy" from "market perform" and raised its 2003 estimates to $1.05 from $1, saying it expects to see improved demand in the second half of the year.

Wal-Mart Stores (WMT: Research, Estimates) gained after the world's No. 1 retailer posted fiscal first-quarter earnings above analysts' estimates.

Treasurys slumped on the retail news, pushing the yield on the 10-year note up to 5.32 percent.

In global trade, European stock markets were higher at midday, while Asian markets closed mixed. The dollar was weaker against the euro and stronger against the yen. Brent crude oil futures rose 35 cents to $27.09.