Stocks rose Tuesday as oil prices continued to fall and an improving job picture brightened the mood on Wall Street after a long holiday weekend.

The Dow Jones industrial average (search) ended up 80.96 points, or 0.79 percent, at 10,341.16, its highest close since July 1. The Standard & Poor's 500 Index (search) was up 7.67 points, or 0.69 percent, at 1,121.30, its highest close since July 2. The technology-laced Nasdaq Composite Index (search) closed up 14.08 points, or 0.76 percent, at 1,858.56.

Cisco Systems Inc. (CSCO), the largest maker of network equipment, helped both the Standard & Poor's 500 Index and the Nasdaq Composite Index after brokerage CIBC World Markets upgraded its rating. General Electric Co. (GE) also underpinned the S&P as several Wall Street firms saw better prospects for the industrial conglomerate.

But oil remained the focus for investors, as U.S. crude oil futures fell on Tuesday, settling down 68 cents at $43.31 a barrel on the New York Mercantile Exchange (search), although off session lows when it slipped below $43.

U.S. oil drilling facilities in the Gulf of Mexico avoided damage from Hurricane Frances, contributing to the dip in prices, while OPEC said markets were well-supplied with crude.

Lower oil prices helped push the Dow up by 1 percent earlier in Tuesday's session but gains were pared as oil prices climbed higher later in the day.

"I think the market was responding to two factors -- the price of oil coming down and a late response to Friday's unemployment numbers," said Peter Cardillo, chief market analyst and chief strategist at SW Bach and Co.

"But I also see some nervousness ahead of Mr. Greenspan tomorrow."

Investors were looking ahead to Federal Reserve Chairman Alan Greenspan's (search) testimony before the House Budget Committee (search), which is expected to reiterate the Fed's stance that interest rates will have to rise at a moderate pace. Higher rates generally drag on stocks because of the impact increased borrowing costs have on corporate profit margins.

Wall Street also moved higher on Friday's jobs report, which was overlooked in last week's very light trading and overshadowed by Intel Corp.'s disappointing mid-quarter report. The Labor Department reported a 0.1 percentage point drop in the unemployment rate and the creation of 144,000 new jobs.

Many traders on Wall Street took last week off because of summer vacation or the Republican party convention, which was held in New York. Markets were closed on Monday for the Labor Day holiday.

Historically, the Dow has managed to squeeze out gains in seven of the last nine trading sessions following Labor Day, according to the Stock Trader's Almanac, but September has generally been a poor month for stocks.

"September may actually turn out to be somewhat more positive than traditionally because there are signs the economy is coming out of a soft patch," said Cardillo.

Most industry sectors enjoyed gains Tuesday, with mining and construction stocks leading the market. Shares of oil producers and oil equipment makers fell as crude oil futures dropped, while semiconductors suffered more losses in the wake of Intel's mid-quarter announcement.

Cisco rose 30 cents, or 1.6 percent, to $19.05. GE shares rose 50 cents, or 1.52 percent, to $33.34 after Smith Barney on Tuesday said the stock had potential to outperform the S&P over the remainder of the year.

Pressure on semiconductors grew more intense as Lehman Brothers cut its ratings on Intel (INTC) and National Semiconductor Corp. (NSM) to "equal weight" from "overweight," citing low demand for computer chips. Intel dropped 16 cents to $19.89, while National Semiconductor slipped 75 cents to $12.42.

After disappointing sales over the past three months, Wal-Mart Stores Inc. (WMT) reported that its same-store sales — comparing stores that have been open for at least a year — were expected to rise 2 percent to 4 percent in September, bolstered by last-minute back-to-school spending. Wal-Mart shares were up 4 cents at $53.29.

Circuit City Stores Inc. (CC) rose 6 cents to $13.70 after announcing that its sales were up 2.9 percent in the second quarter. The electronics retailer was scheduled to announce its full second-quarter results on Sept. 17.

Embattled airline US Airways Group Inc. (UAIR) fell 30 cents to $2.05 after its pilots' union rejected the company's latest contract proposal.

Trading was moderate, with 1.2 billion shares changing hands on the New York Stock Exchange (search), below the 1.4 billion daily average for last year. About 1.3 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year. Advancers outnumbered decliners on the NYSE and the Nasdaq by about 3-to-2.

The Russell 2000 index of smaller companies was up 6.69, or 1.2 percent, at 562.93.

Overseas, Japan's Nikkei stock average rose 0.5 percent. In Europe, Britain's FTSE 100 was flat for the session, France's CAC-40 closed up 0.3 percent and Germany's DAX index also finished flat.

Reuters and the Associated Press contributed to this report.