NEW YORK (CNN/Money) - U.S. stocks rallied Tuesday on gains in technology issues, aided by some strength in the Dow industrials, while shrugging off the Federal Reserve's decision to keep interest rates unchanged, as had been expected.

The Nasdaq composite (up 23.62 to 1390.76, Charts) gained around 1.7 percent, the Dow Jones industrial average (up 100.85 to 8574.26, Charts) added 1.2 percent, and the Standard & Poor's 500 index (up 12.45 to 904.45, Charts) added 1.4 percent.

"There was no bad news. The FOMC meeting came out. There was no rate cut. It was all priced into the market," Stephen Murphy, associate director at Institutional Direct, told CNNfn's Street Sweep. "I think Bush's economic team is regarded positively and there was really no reason to sell."

"You've probably seen most of the bottom," Murphy added. "I really think we're in a situation where we're building a base."

The central bank opted to keep the federal funds rate target -- an overnight bank lending rate -- unchanged at 1.25 percent, a 40-year low; the bias remained at "neutral," a stance indicating that the risks of inflation and weakness are evenly balanced.

After surprising market participants by cutting interest rates by a half-percentage point at its November meeting, an acknowledgement of the weakness in the economy, the Federal Reserve was largely expected to hold rates steady.

After having lost four percent in Monday's session, the Nasdaq rose Tuesday, with some of the previous session's big losers enjoying a bounce. Heavily-weighted big caps such as Oracle (ORCL: up $0.17 to $10.70, Research, Estimates), Cisco Systems (CSCO: up $0.43 to $13.93, Research, Estimates) and Sun Microsystems (SUNW: up $0.06 to $3.46, Research, Estimates) were among the stocks edging higher.

IBM (IBM: up $1.21 to $80.80, Research, Estimates), Microsoft (MSFT: up $0.48 to $54.01, Research, Estimates) and other technology stocks on the Dow were among the names lifting the 30-issue average. Coca-Cola (KO: up $1.40 to $46.50, Research, Estimates) was the Dow's other big gainer.

"Techs took the brunt of the selling yesterday, so that may be why they're performing a little better today," said Charles Payne, CEO and chief analyst at Wall Street Strategies. "There is also a sort of sincere belief that next year, and even in the next six months, tech and telecom will perform better, so that may be reflected in the buying, as well."

In the day's corporate news, a number of companies issued guidance about their current and future quarters.

On the upside, Amazon.com (AMZN: up $0.18 to $21.86, Research, Estimates) CEO Jeff Bezos -- in an interview with a French newspaper -- reaffirmed the Internet retailer's fourth-quarter sales forecast of $1.3 billion-to-$1.4 billion, saying the company's free shipping promotion on orders of $25 or more is producing results. The stock failed to gain ground on the news.

Meanwhile, cell phone leader Nokia (NOK: down $0.59 to $17.43, Research, Estimates) warned that fourth-quarter sales will be weaker than expected, due to somewhat lackluster sales of new handset models. However, the company also said that earnings will be in line with estimates.

A number of stocks involved in the day's biggest deals were also on the move.

Defense contractor Northrop Grumman (NOC: up $1.27 to $96.62, Research, Estimates) reached an agreement with regulators on a key term of its proposed $6.7 billion merger with TRW (TRW: up $0.91 to $51.81, Research, Estimates), paving the way for a shareholder vote Wednesday.

Hughes Electronics (GMH: down $0.25 to $11.05, Research, Estimates) and Echostar Communications (DISH: up $2.04 to $21.09, Research, Estimates) dropped their proposed $19 billion merger, due to opposition from federal regulators. Echostar must pay Hughes, a unit of General Motors (GM: up $0.78 to $36.95, Research, Estimates), $600 million in cash as a result of the termination of the proposed deal.

Stocks took a muted reaction to news that Donaldson Lufkin & Jenrette founder William Donaldson will be named SEC chairman.

"The one thing that's maybe notable today is that stocks have really held up," said Wall Street Strategies' Payne. "There have been a few times when they've started to drift and then they've come back up, so there's a little bit of buying on the weakness. However, the volume is totally anemic."

Treasury prices were a little lower, pushing the 10-year note yield up to 4.04 percent. The dollar was a little stronger against the yen and the euro.

Light crude oil futures rose 54 cents to $27.74 a barrel. Gold declined.

Market breadth was positive on light volume. On the New York Stock Exchange, winners topped losers by more than 2 to 1 as 1.25 billion shares changed hands. On the Nasdaq, advancers beat decliners almost 10 to 7 as 1.45 billion shares traded.