NEW YORK – Stocks rose Tuesday as investors, overcoming worries about rising interest rates and the U.S. handover of power in Iraq next week, snapped up shares of JDS Uniphase on news of a big investment in fiber optics by SBC Communications.
The Dow Jones industrial average (search) rose 23.60 points, or 0.23 percent, to 10,395.07. The broader Standard & Poor's 500 Index (search) gained 4.11 points, or 0.36 percent, to 1,134.41. The technology-laced Nasdaq Composite Index (search) climbed 19.77 points, or 1 percent, to 1,994.15.
Positive earnings from Goldman Sachs Group and PalmOne Inc. also helped underpin the market. Wal-Mart Stores Inc., however, dragged on the blue-chip Dow following news that a federal judge certified a class-action suit charging that the world's biggest retailer discriminated against female workers.
"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 LLC. "Aside from tech, you're seeing light buying by investors, but it's not aggressive. There's no terrific surge in volume. There's not a lot of strength behind this, but it's better than nothing."
Worries have been building ahead of next week's meeting of the Federal Reserve's (search) policy-setting arm, which is widely expected to raise interest rates by one-quarter of a percentage point at the end of its June 29-30 meeting.
The United States is due to transfer power to an interim Iraqi government on June 30, and many are worried the date could be marked by a spike in violence.
"People are sitting on their hands and waiting for the Fed next week, said John Forelli, portfolio manager at Independence Investments LLC. "They're looking for the data and trying to see whether inflation's picking up, and whether growth will slow if the Fed does raise rates."
Wal-Mart's (WMT) stock fell 1.6 percent, or 87 cents, to $54.06, and was among the Dow's biggest percentage losers.
On Tuesday, U.S. District Court Judge Martin Jenkins certified the class of 1.6 million women who worked for Wal-Mart's U.S. stores since Dec. 26, 1998, in what plaintiffs' lawyers called the biggest civil rights class action in U.S. history. Wal-Mart said it would appeal the decision.
SBC (SBC) said Tuesday it plans to build a new fiber optic network at a cost of $4 billion to $6 billion over the next five years. SBC slipped, but the announcement drove fiber-optics stocks higher.
Shares of JDS Uniphase (JDSU), which supplies parts to boost the speed and capacity of fiber optic networks, surged 12 percent, or 38 cents, to $3.58. Avanex Corp. , which provides systems for fiber optic communications networks, jumped 15 percent, or 40 cents, to $3.
While quarterly earnings were strong at both Goldman Sachs and Morgan Stanley, analysts and investors worried that a slow summer and wariness on the part of individual investors would impact the brokerage houses' investment businesses.
Goldman Sachs (GS) 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 (MDW) 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 Inc. (PALM) 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.
Supermarket chain Kroger Co. (KR) 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.
Volume was moderate with 1.4 billion shares traded on the New York Stock Exchange and 1.6 billion shares traded on Nasdaq.
The Russell 2000 index of smaller companies was up 3.15, or 0.6 percent, at 571.89.
Overseas, Japan's Nikkei stock average slipped 0.2 percent. In Europe, Britain's FTSE 100 closed down 0.8 percent, France's CAC-40 fell 1.1 percent for the session and Germany's DAX index lost 1.5 percent in late trading.
Reuters and the Associated Press contributed to this report.