NEW YORK (CNNMoney.com) -- Stocks rallied Wednesday, closing higher for the fourth session in a row, with all three major market gauges carving out four-month highs, thanks to a broad-based advance.

The Nasdaq composite (up 11.85 to 2,227.67, Charts) added around 0.5 percent, closing at its highest point since May 16.

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The Dow Jones industrial average (up 45.23 to 11,543.32, Charts) added about 0.4 percent, surpassing the four-month high it hit on Tuesday after jumping 101 points.

The broader Standard & Poor's 500 (up 4.96 to 1,318.07, Charts) index also gained 0.4 percent, closing at its highest point since May 10.

Treasury prices rose Wednesday, lowering the corresponding yields. Oil and gold prices gained.

Stocks have risen recently as the price of oil has slipped. Even a modest uptick in oil prices Wednesday - after seven down days - failed to deter the bulls, with crude hovering below $64 a barrel after tapping out at $78.40 in July.

The drop in oil prices has sparked hopes that pressure on consumer spending from a slowing housing market is being countered by relief from falling energy prices.

"Higher oil [and gas prices] work as a tax to slow down the consumer, so with prices falling, the consumer may be able to get some relief eventually," said John Davidson, president and CEO at PartnerRe Asset Management. "Lower prices will also eventually take some pressure off inflation."

However, the advance Wednesday was more contained, partly because Tuesday's advance was substantial and brought the first day of robust trading volume in a while, said Tim Heekin, head of stock trading at Thomas Weisel.

Looking forward, "people may be a little nervous about tomorrow's retail sales report and Friday's CPI report," he said, referring to the week's biggest economic reads, clustered at the end of the week.

August retail sales, due at around 8:30 p.m. ET Thursday, are expected to have fallen 0.2 percent after rising 1.4 percent in July. Sales excluding autos are expected to have risen 0.3 percent after rising 1 percent in the previous month.

August import and export prices, July business inventories and the weekly jobless claims report are also all due Thursday. Thursday brings quarterly earnings from Bear Stearns (Charts) before the start of trade and Adobe Systems (Charts) after the close.

However, of greater importance to investors will likely be this Friday's consumer price index, Davidson said. That's because of ongoing concerns about inflation ahead of next week's Federal Reserve policy meeting.

Wall Street is also being influenced by Friday's quadruple options expiration, Heekin said.

Friday brings the quarterly event in which stock index futures and options and individual stock futures and options all expire simultaneously. The process can contribute to increased volatility in the underlying stocks, in the days leading up to and the day of the expiration.

Oil prices fluctuated Wednesday following the release of the government's weekly oil inventory report, which showed a bigger than expected drop in crude stocks and a smaller than expected jump in distillates, used in heating oil.

U.S. light crude oil for October delivery rose 21 cents to settle at $63.97 a barrel on the New York Mercantile Exchange, trimming bigger earlier gains.

Crude prices tumbled nearly 3 percent Tuesday and have fallen for seven straight sessions, helping to boost stocks by lowering worries about inflationary pressure.

Ford Motor (up $0.13 to $9.19, Charts) is reportedly planning to cut white-collar salary costs by a third, according to a Wall Street Journal article Wednesday. Shares of the troubled automaker gained 1.4 percent.

Hewlett-Packard remained under pressure in the wake of a boardroom scandal that led the company to shake up its executive management team Tuesday, including the ouster of chairwoman Patricia Dunn.

California Attorney General Bill Lockyer said in a televised interview late Tuesday that his office has enough evidence to indict executives at HP. HP (down $0.55 to $36.37, Charts) shares lost 1.5 percent.

Merck (down $1.06 to $41.09, Charts) slipped 2.5 percent after a study showed that its withdrawn painkiller Vioxx causes heart problems soon after treatment rather than after longer-term use, as the drugmaker has maintained. The study also showed that the drug increases kidney risks.

HP and Merck both weighed on the Dow, but the blue-chip barometer managed to rise nonetheless, thanks to strength in economically sensitive issues such as Boeing (up $2.06 to $76.32, Charts), Caterpillar (up $1.18 to $66.33, Charts) and Alcoa (up $0.60 to $28.00, Charts).

Also Wednesday, Lehman Bros. (up $2.04 to $70.06, Charts) reported higher quarterly earnings that topped estimates, thanks to increased trading revenue. Shares gained about 3 percent.

That helped lift other bank stocks, and the Amex Securities Broker/Dealer (Charts) index added 2.4 percent.

Companies that benefit from lower oil prices rose for a second session, including airlines, truckers and railroad firms. The Dow Jones transportation average (up 81.60 to 4,451.45, Charts) added 1.9 percent.

Oil stocks also rebounded after a few down sessions. Exxon Mobil (up $0.66 to $65.36, Charts) and Valero Energy (up $1.09 to $52.41, Charts) both gained. The Amex Oil (up 14.91 to 1,074.16, Charts) index added 1.4 percent.

Metal and mining stocks gained, too, with the iShares Silver Trust (up $1.66 to $111.85, Charts) index rising 1.5 percent and the Amex Gold Bugs (up $3.11 to $312.28, Charts) index adding 1 percent.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 2 to 1 on volume of 1.66 billion shares. On the Nasdaq, advancers topped decliners 3 to 2 on volume of almost 1.89 billion shares.

COMEX gold for December delivery rose $2 to settle at $596.30 an ounce, after slumping $23 in the previous two sessions.

Treasury prices rose, lowering the yield on the 10-year note to 4.76 percent from 4.77 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen and was barely changed versus the euro.

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