Stocks jumped on Tuesday, helped by optimism about the outlook for technology spending and gains in oil prices that lifted energy shares.
The Nasdaq and S&P 500 climbed above 1 percent, with the S&P breaking above its 50-day moving average for the first time since July 24.
Piper Jaffray said Apple Inc 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.
Technology has benefited in recent sessions from the view that the sector may be a safe haven for investors during the mortgage market crisis.
Exxon Mobil Corp., up 1.9 percent at $87.38, led the Dow and S&P 500 higher as crude oil prices jumped $1.04 to settle at $75.08 a barrel.
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 at Weeden & Co. in Greenwich, Connecticut.
The Dow Jones industrial average was up 101.28 points, or 0.76 percent, at 13,459.02. The Standard & Poor's 500 Index was up 18.64 points, or 1.26 percent, at 1,492.63. The Nasdaq Composite Index was up 43.43 points, or 1.67 percent, at 2,639.79.
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 to a one-month high, gaining 4.9 percent to $145.26 in heavy volume.
Yahoo Inc. jumped 7.5 percent to $24.43 after Bear Stearns named the Internet media company's stock as a top pick, saying it was an attractive takeover candidate.
A report showed manufacturing expansion slowed in August, while construction spending fell unexpectedly, underscoring a view that the Federal Reserve could cut interest rates.
The Institute for Supply Management said its index of national factory activity expanded in August, though at a slower pace than in July.