U.S. stocks traded sharply higher Tuesday afternoon as investors were encouraged by strong consumer confidence data that led to a positive outlook on the economy’s health.

The latest reading of the Conference Board consumer confidence index rose to 102.3 in December from 92.6 in November. Wall Street had expected a reading of 94.

All three major U.S. stock indexes surpassed their 2004 closing highs, although trading was light in the holiday week.

The Dow Jones Industrial Average was up 78.41 points, or 0.7 percent, to 10,854.54, after climbing as high as 10,855 earlier in the session, while the Nasdaq Composite Index added 22.97 points, or 1.1 percent, to 2,177.19 and the S & P; 500 rose 8.62 points, or 0.7 percent, to 1,213.54.

Among local movers, Diagnostic Products Corp. gained 4.9 percent to close at $2.60 as investors reacted to the promotion of Sidney Aroesty, the immunodiagnostic manufacturer’s senior vice president of operations and chief operating officer, to the additional post of president. And Homestore Inc. jumped 6.1 percent to $3.11 after defendants including the company’s former CEO and chairman Stuart Wolff were denied a motion for continuance in their trial over alleged improper accounting.

On the downside, Univision Communications Inc. dipped 0.9 percent to $28.33 on news that Century City-based Spanish-language broadcasting giant had exercised its option to purchase two television stations in Puerto Rico for about $190 million. And shares of Hi Shear Technology Corp., the Torrance-based aerospace products company, dropped 6.5 percent to $5.61.