NEW YORK (CNN/Money) - U.S. stocks soared Tuesday as investors took news that the Taliban had retreated from the Afghanistan capital of Kabul as a sign that the economic recovery could begin sooner than anticipated.
The Taliban abandoned Kabul to Northern Alliance rebels, some of whom are now occupying the city. This was coupled with investigators saying Monday's American Airlines plane crash in New York was probably due to engine failure, not terrorism.
"Investors have come to understand that the progress in the war on terrorism will influence the economy in 2002," Joseph Battipaglia, chief investment strategist, Gruntal & Co., told CNNfn.
Wall Street also is hoping that the economic stimulus package now before Congress, which President Bush has urged lawmakers to expedite, will stoke business activity.
The Nasdaq composite added 51.98 to 1,892.11. The Dow Jones industrial average rose 196.58 to 9,750.95, and the Standard & Poor's 500 tacked on 20.76 to close at 1,139.09.
Fears that the air crash, which killed at least 262 people, may have been deliberate had undermined investor confidence Monday.
"It's got a bit of a Yankee doodle dandy feel to it today. However, we might have had a rise yesterday (Monday), too, had the plane crash not happened," Bryan Piskorowski, market commentator, Prudential Financial, told CNNfn's Halftime Report. (479K WAV) (479K AIFF)
Tech stocks, including chips and computers, led the Nasdaq higher, while the Dow was buoyed by market breadth and surges in share worth of more than $2 by General Motors (GM: up $2.60 to $44.99, Research, Estimates) and 3M (MMM: up $2.46 to $113.41, Research, Estimates).
Some positive news from AOL Time Warner and Intel at the Comdex technology conference in Las Vegas added corporate strength, as did results from some of the nation's retailers.
Asian stocks finished mixed Tuesday, while European bourses rallied by the close on telecom and tech buying. Latin American markets also closed mostly higher.
The rise in stocks put pressure on government debt prices. Treasurys fell, with the 10-year note yield closing at 4.39 percent, up from 4.32 percent Friday; the bond markets were closed Monday for Veterans Day.
On the currency market, the dollar was stronger against the euro and the yen. In London, Brent oil futures rose 41 cents to $20.99 a barrel.
Market breadth was positive. On the Nasdaq, winners topped losers by a more than 2-to-1 margin as 2.16 billion shares traded. On the New York Stock Exchange, advancers beat decliners by more than 2-to-1 as 1.33 billion shares changed hands.
Chips and boxes rocket the techs
Within the tech industry, semiconductors and computer stocks did particularly well; the Goldman Sachs hardware index rose more than 4 percent.
In a Securities and Exchange Commission filing, chipmaker Texas Instruments (TXN: up $1.92 to $33.82, Research, Estimates) reiterated its fourth-quarter outlook and also said the third quarter of 2001 will mark the bottom for semiconductor orders.
Credit Suisse First Boston previewed No. 1 chip equipment maker Applied Materials' (AMAT: up $1.84 to $40.80, Research, Estimates) fourth-quarter earnings, due out after the close of trading Wednesday, saying it expects the company to meet First Call estimates of a 4-cent-per-share profit.
Speaking at the Comdex technology conference in Las Vegas, Oracle (ORCL: down $0.88 to $14.52, Research, Estimates) CEO Larry Ellison said late Monday that profit for the business software maker in the current quarter will disappoint, but he expects to see a rebound next year.
In addition to the Oracle warning, lots of potentially market moving corporate news emerged from Comdex.
AOL Time Warner (AOL: up $1.57 to $38.00, Research, Estimates) said it has formed a global broadband technology pact with Sony (SNE: up $0.55 to $40.50, Research, Estimates), which will also include Finnish phone maker Nokia (NOK: up $1.00 to $23.38, Research, Estimates). AOL Time Warner is the parent company of CNN/Money.
No. 1 chipmaker Intel (INTC: up $1.67 to $30.05, Research, Estimates) rose after IBM (IBM: up $1.84 to $116.70, Research, Estimates) launched Linux-operating system-based servers using Intel's Foster semiconductors.
In other positive tech news, JP Morgan upgraded Checkpoint Software (CHKP: up $3.39 to $41.90, Research, Estimates) to "buy" from "long-term buy" and set a $50 price target.
Airlines recover
A number of sectors that were particularly hurt by the uncertainty surrounding the crash - airline, hotel, booking and aerospace - bounced back in Tuesday trade.
AMR (AMR: up $0.52 to $17.01, Research, Estimates), parent of the carrier involved in the crash, rebounded. Also higher were Delta Air Lines (DAL: up $1.41 to $24.68, Research, Estimates), Priceline.com (PCLN: up $0.15 to $4.43, Research, Estimates), and Marriott International (MAR: up $2.00 to $34.50, Research, Estimates).
Watson Pharmaceutical (WPI: down $18.61 to $28.54, Research, Estimates) earned 46 cents per share in the third quarter, showing a gain from a year earlier but missing estimates. The drugmaker also lowered guidance.
Aluminum producer and Dow component Alcoa (AA: up $1.61 to $36.30, Research, Estimates) is near an agreement to buy Australian mining company WMC for about $6 billion in cash and stock, according to a published report.
Dow components Wal-Mart Stores (WMT: down $0.58 to $55.00, Research, Estimates) and Home Depot (HD: up $2.88 to $44.00, Research, Estimates) both reported improved third-quarter results that matched analysts' estimates.
Of the 29 Dow stocks that have reported for their most recent quarters, 12 said results met estimates, 11 said results beat estimates and six said results fell short of expectations. The last Dow component, computer products maker Hewlett-Packard (HWP: up $0.93 to $20.23, Research, Estimates), is slated to post its quarterly data after the markets close Thursday.
Another hardware maker, Dell Computer (DELL: up $1.03 to $26.82, Research, Estimates), rallied in advance of its results due Thursday. The computer hardware maker is expected to post fiscal third-quarter earnings of 15 cents a share, a 40 percent decline from the 25 cents per share earned one year earlier. 
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