US stocks gained on Tuesday, led by advances in technology shares after positive broker comments on Apple Inc and Yahoo Inc and data pointing to strength in the economy. Piper Jaffray said Apple could beat its iPhone sales goal in the September quarter while research group iSuppli said the iPhone outsold all smart phones in the United States in July.
Helping to bolster equities was a report showing that factory activity expanded narrowly in August, easing concerns that the US economy may be headed for a recession. "A lot of it is attributed to the Nasdaq. If there was going to be slow growth, one of the first businesses to cut back would be technology," said Steve Goldman, market strategist, Weeden & Co in Greenwich, Connecticut.
Exxon Mobil Corp, up 1.9 percent at $87.34, led the Dow and S&P 500 higher as crude oil prices jumped $1.06 to $75.10. The Dow Jones industrial average was up 52.83 points, or 0.40 percent, at 13,410.57. The Standard & Poor's 500 Index was up 12.71 points, or 0.86 percent, at 1,486.70. The Nasdaq Composite Index was up 33.46 points, or 1.29 percent, at 2,629.82. Tech shares added to gains in afternoon trading, with Apple leading the way.
Apple has been revamping its iPods and there is speculation it could unveil at an event on Wednesday a new video iPod with a large touch screen, among other options. Apple shares rose 4 percent to $144.01 in heavy volume. Yahoo jumped 6.1 percent to $24.11 after Bear Stearns named the Internet media company's stock as a top pick.
Shortly after the opening, the Institute for Supply Management said its index of national factory activity expanded in August, though at a slower pace than in July. "It shows the overall economy is still growing at a good rate," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
Futures markets are betting the Federal Reserve will lower the benchmark fed funds rate by at least a quarter-percentage point to 5 percent when it next meets on September 18. Also on Tuesday, Deutsche Bank's chief executive said the outlook for banks world-wide had begun to brighten after weeks of turmoil in global credit markets.