A surge in technology shares lifted stocks moderately higher Tuesday, as PalmOne's strong earnings report injected a bit of life into what has been a stagnant market.
The rally helped investors put aside some of their interest rate concerns. But while Goldman Sachs Group and Morgan Stanley were rewarded for posting major gains in revenue and soundly beating Wall Street expectations, the rest of the financial sector, which is sensitive to interest rates, was largely ignored.
Investors continued to wonder whether the Federal Reserve will raise the benchmark rate by a quarter percentage point or a half-point when its Open Market Committee meets next week. That kept the markets mixed through most of the session before the tech rally caught on.
"If you look at the sectors, only technology seems to be breaking out to the upside," said Michael Sheldon, chief market strategist at Spencer Clarke. "Aside from tech, you're seeing light buying by investors, but it's not aggressive."
The Dow Jones industrial average rose 23.60, or 0.2 percent, to 10,395.07. The Standard & Poor's 500-stock index gained 4.11, or 0.4 percent, to 1134.41, and the tech-heavy Nasdaq composite index rose 19.77, or 1 percent, to 1994.15.
Goldman Sachs gained $1.81, to $90.60, after it announced a 71 percent jump in quarterly earnings, beating Wall Street estimates by an impressive 36 cents per share. Morgan Stanley doubled its second-quarter earnings from a year ago, beating expectations by 11 cents per share before a one-time $109 million charge related to its aircraft financing business. The brokerage firm was up 90 cents, at $52.15.
In the technology sector, PalmOne surged $7.90, or 37 percent, to $29.36 after reporting earnings that surpassed analysts' estimates by 14 cents per share, thanks to strong demand for its handheld computing devices. That triggered buying in other technology stocks, particularly semiconductors. Intel rose 52 cents, to $28.04, while rival Advanced Micro Devices climbed 57 cents, to $14.67.
Supermarket chain Kroger missed Wall Street expectations by a penny, blaming the grocery workers' strike in Southern California for losses totaling 10 cents per share. Kroger gained 47 cents, to $17.84, on a stronger outlook.
Wal-Mart Stores, already hurt by lower-than-expected June sales, slumped 87 cents, to $54.06, as a federal judge approved class-action status for a sex-discrimination lawsuit against the company.
* The New York Stock Exchange composite index rose 8.65, to 6553.81; the American Stock Exchange index rose 7.11, to 1231.71; and the Russell 2000 index of smaller-company stocks rose 3.15, to 571.89.
* Advancing issues outnumbered declining ones by 7 to 6 on the NYSE, where trading volume rose to 1.38 billion shares, from 1.12 billion on Monday. On the Nasdaq Stock Market, advancers outnumbered decliners by 9 to 7 and volume totaled 1.64 billion, up from 1.36 billion.
* The price of the Treasury's 10-year note fell $2.19 per $1,000 invested, and its yield rose to 4.72 percent, from 4.69 percent on Monday.
* The dollar rose against the Japanese yen and the euro. In late New York trading, a dollar bought 109.32 yen, up from 108.77 late Monday, and a euro bought $1.2101, down from $1.2109.
* Light, sweet crude oil for July delivery settled at $38.11, up 48 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose to $395.00 a troy ounce, from $394.00 on Monday, on the New York Mercantile Exchange's Commodity Exchange.