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U.S. stocks rose slightly Tuesday as a rebound in July retail sales data lifted consumer stocks and economic data out of Europe showed fractional improvement. The Dow Jones Industrial Average DJIA +0.16% rose 26.02 points, or 0.2%, to 13,195.45. The S&P 500 SPX +0.19% gained 3 points, or 0.2%, to 1,407.11, led by financials and consumer discretionary. The Nasdaq Composite COMP +0.11% rose 2.12 points, or less than 0.1%, to 3,024.64, after a brief drop. Click to Play Meet the freshman dividend class of 2012 With investor demand for yield running high, new payments for these shares should boost their appeal. Jack Hough joins Markets Hub to discuss. Photo: Bloomberg. Ahead of the bell, the Commerce Department said sales at U.S. retailers increased 0.8% in July, breaking a string of three straight monthly declines, topping expectations for 0.2% growth. Sales excluding autos and gasoline rose 0.9%. Read more on retail sales. "People are pretty relieved about the retail sales data — it was not only strong on the headline but also the core," said Myles Zyblock,chief institutional strategist at RBC Capital Markets. In Europe, data showed that the German economy grew 0.3% on a seasonally-adjusted basis in the second quarter, beating forecasts of a 0.2% rise. French gross domestic product was unchanged in the second quarter, which was better than economists' expectations of a 0.1% decline. Read more on Europe Markets. Stocks are getting a lift from Europe's momentum toward some sort of fiscal resolution and economic indicators, even if they are beating lowered expectations. But there's also some anticipation the Fed could announce QE3, or a third round of quantitative easing, leading up to the Fed's annual retreat in Jackson Hole, Wyo., said John Canally, chief market strategist at LPL Financial. "We're beating lowered expectations. While not great on an absolute basis, we're getting the best of both worlds: strong enough to not be in a recession but weak enough to get help," Canally said. MARKETS | Expanded markets coverage • The Tell: Market news and analysis • U.S. and Canada markets | Canada section • European and Middle Eastern markets • Asia — from Japan to China to Australia • Latin America: Brazil, Argentina, Mexico, Investors may also be waking up to the fact that even in a weak economic recovery, equities markets are still up nearly 20% from a year ago. Still, concerns about Europe debt struggles and slowing growth in China are keeping a cautious tone over the market, as investors worry about U.S. corporate earnings dragged by cooler global growth, said Zyblock. "We still have a tenuous situation in Europe and the data out of Asia is still pretty soft," he said. With markets in a classic mid-August low-volume mode, investors find themselves at a crossroads. "If you broaden it out, the market's doing well, but we're reaching the upper edge of a trading range, so people are leery of chasing it here," said Robert Pavlik, chief market strategist at Banyan Partners. Shares of Nasdaq-listed Groupon Inc. GRPN -26.56% fell 27% to $5.54, triggering a short-sale limit, after the daily-deals site issued a disappointing third-quarter forecast, in part due to concerns over the economic situation in Europe. Read: Groupon hit by outlook despite growth Leading the Dow higher, Home Depot Inc. HD +3.84% rose 3.9% after reporting higher fiscal second-quarter results. Read more on Home Depot. Advancing stocks slightly outnumbered decliners on the NYSE, while the opposite was true on the Nasdaq. Trading volume of NYSE-listed stocks topped 1.55 billion shares, while Nasdaq-listed stocks were just over 839 million shares. U.S. stocks had faltered on Monday, hampered by an empty U.S. economic calendar and a lackluster reading on Japan's growth, with the S&P 500 snapping its longest daily winning streak since Dec. 2010