Stocks rallied on Tuesday after Alcoa's quarterly results heartened investors that had been pushed to the sidelines by jitters about the sustainability of the economic recovery.

Even so, recent low volume suggests the market's six-day climb could be running out of steam, while the cost of protection against a market drop keeps growing.

Alcoa Inc , the largest U.S. aluminum producer and seen as a bellwether for the U.S. economy, rose 1.1 percent to $10.99 after it reported stronger-than-expected results and raised its estimate for global aluminum consumption.

In a world where there was a vacuum of information, we now have a new significant positive data point, said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors in Rochester, New York.

The rosy results gave a boost to other Dow component stocks such as Intel and JPMorgan Chase & Co , which are due to report earnings this week. Intel, which reports after the closing bell, was up 2 percent to $20.99, while JPMorgan gained 3 percent to $40.55.

The S&P 500 Index <.SPX> is up about 8 percent from a recent intraday low on July 1, though trading volume in the past two sessions was the lightest of the year.

It's raising new cautionary flags, said Scott Fullman, director of derivative investment strategy at WJB Capital Group.

The Dow Jones industrial average <.DJI> gained 164.15 points, or 1.61 percent, to 10,380.42. The Standard & Poor's 500 Index <.SPX> rose 17.03 points, or 1.58 percent, to 1,095.78. The Nasdaq Composite Index <.IXIC> climbed 38.33 points, or 1.74 percent, to 2,236.69.

Fullman said total volume in the options pit also eased by 6.1 percent on Monday, led by a 10.7 percent drop in call trading. The drop increased the total put/call ratio to 0.84 from 0.75, indicating more investors are betting on stocks' fall.

Weak volume is generally viewed as an indication investors lack conviction, but analysts noted volume has been lower since the market started to rally in March 2009. Summer holidays can also cause lighter trading.

COST OF PROTECTION

In the options market, a heavy put buying was detected in an exchange-traded fund that tracks the S&P, indicating that a trader is combining the leverage of options and ETF to obtain a short-term insurance policy.

One investor snatched up July $35 puts on the ProShares Ultra S&P 500 , an exchange traded fund that delivers double the performance of the S&P 500. The heavy purchase drove premiums to jump from 32 cents to as high as 46 cents, said David Russell, options strategist at optionMonster.com.

Volume surged to 19,624 contracts, more than nine times open interest in the strike. The ETF rose 3 percent to $36.41, up about 13 percent from a week ago.

Apple Inc slipped 2 percent after a poor consumer guide review for its iPhone 4 amid complaints about the device's reception. Apple was down at $252.17.

Some of the blogs out there were speculating there was going to have to be a full iPhone 4 recall and since then they've been defended by five houses on Wall Street, said Dave Lutz, managing director at Stifel Nicolaus in Baltimore.

I think the Street is anticipating Steve Jobs doing what it takes to make it right and not have the image tarnished, said Lutz, who is long Apple.

(Reporting by Leah Schnurr; Editing by Kenneth Barry)

New York Apple inc. Investment