Blue chips rallied yesterday, pushed higher by new data showing US consumers spent more last month than expected - good news for investors searching for bits of strength in the wheezing economy.

The Dow Jones Industrial Average rose 121.09 points to 10,522.81, while the Nasdaq Composite Index rose 9.28 points to 2,027.12. The benchmark Standard & Poor's 500 index added 6.71 points to 1,211.23.

For July, the Dow edged up 0.2 per cent, the Nasdaq Composite fell 6.5 percent, and the S&P 500 lost 1.1 per cent. Year-to-date, the Dow is off 2.45 per cent, the Nasdaq is down nearly 18 per cent and the S&P 500 is off 8.3 per cent.

Wall Street, eager for signs of economic strength after a dismal second-quarter reporting season, zeroed in on the Commerce Department's report that said US consumer spending rose 0.4 per cent last month to a $7.01 trillion annual rate.

Investors largely dismissed a second set of data showing US consumer confidence slipped in July after a rush of corporate layoffs.