Stocks jump on retail sales, merger talk

NEW YORK (CNNMoney.com) -- Stocks bounded higher Tuesday after a surprisingly strong retail sales report and more news of potential airline consolidation.

The Dow Jones industrial average Nasdaq and Standard & Poor's composite all surged in the first moments of trade.

The Commerce Department reported that overall retail sales jumped a much stronger-than-expected 1 percent last month, compared with a revised 0.4 percent decline in the prior month. It was the biggest increase since this July when overall sales rose 1.4 percent.

In corporate news, UAL's United Airlines is in preliminary talks with Continental Airlines about a possible merger, according to media reports.

Oil prices fell 2 cents to $60.98 a barrel in early trade ahead of the weekly U.S. fuel inventory report expected at 10:30 a.m.

The dollar was higher against the euro and the yen.

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