NEW YORK (CNN/Money) - Stocks surged Tuesday, boosted by falling oil prices and upbeat corporate news, amid renewed buying interest after the long holiday weekend

The Dow Jones industrial average (up 80.96 to 10,341.16, Charts) gained 0.8 percent and the Nasdaq composite (up 14.08 to 1,858.56, Charts) gained nearly 0.8 percent

The Standard & Poor's 500 (up 7.67 to 1,121.30, Charts) index gained 0.7 percent. All three indexes closed below their highs of the session.

Financial markets were closed Monday for the Labor Day holiday.

Light volume and little momentum had marred stock action for the past few weeks, as investors waited out the Olympics, the Republican Convention and the end of the dog days of summer.

After those events passed safely -- without any terrorist incidents, as some had feared -- investors were willing to get back in the stock market Tuesday.

"We had a very nice rally, primarily due to the fact that we had oil down, and there was some relief that the convention passed without incident," said Tom Schrader, managing director of U.S. equity trading at Legg Mason.

Oil prices dropped for the second session in a row as supply concerns eased. OPEC's president said that there is now a crude oversupply of about 1.5 million barrels per day.

U.S. light crude for October delivery fell 68 cents to settle at $43.31 a barrel on the New York Mercantile Exchange.

Wednesday's trading is likely to take a cue from the Federal Reserve.

Starting at around 10:30 a.m. ET, Fed Chair Alan Greenspan will speak before the House Budget Committee regarding the health of the economy.

At around 2:00 p.m. ET, the Fed releases its latest "Beige Book" report on economic activity in each Fed district.

After the close Tuesday, wireless chipmaker TriQuint Semiconductor (TQNT: Research, Estimates) warned that third quarter and full year results will miss expectations. Shares fell 4 percent in after-hours trade.

Also after the close, luxury retailer Coach (COH: Research, Estimates) boosted its sales and earnings forecast for the fiscal first-quarter.

Whether the positive momentum is sustainable beyond the short term is still in question, considering that September traditionally is one of the worst months for the market.

"I don't think we're going to buck the September trend, and I don't think we'll see a big sell-off," said Barry Hyman, equity strategist at Ehrenkrantz King Nussbaum. "I think we'll see some rallying through the next week, and then a small pullback after that in late September, judging by the cycle the market has been going in."

Hyman said that generally, the bullish case is looking better, due to last week's mostly in-line monthly jobs report, the stabilization of oil prices and the bump that President Bush got in the polls following the end of the Republican National Convention.

However, worries about the President's reelection campaign will likely resurface once the post-convention glow wears off, Schrader added.

Although studies have shown that stocks perform better under Democratic presidents, the perception for many on Wall Street remains that a Republican White House is preferable, thanks to the tendency for such an administration to support more "big business-friendly" market policies.

Gains were broad-based, with 28 out of 30 Dow issues gaining.

Among the session's other movers, Cisco Systems (CSCO: up $0.30 to $19.05, Research, Estimates) gained after CIBC World Markets upgraded the stock to "outperform" from "sector perform."

General Electric (GE: up $0.50 to $33.34, Research, Estimates) rose after Smith Barney said the stock could possibly rise more than the S&P 500 this year, Reuters reported.

A few companies also issued improved third-quarter forecasts, boosting their shares.

Seagate Technology (STX: up $0.45 to $12.32, Research, Estimates), which makes computer hard drives, gained after it said third-quarter revenue and earnings per share would top estimates due to improved demand for its products from the previous quarter.

Trucking firm Yellow Roadway (YELL: up $1.28 to $43.70, Research, Estimates) gained after raising its third-quarter earnings forecast, citing a better pricing environment. A number of trucking and transportation firms have been seeing increased demand for their offerings recently, due to the global economic expansion.

A number of trucking, railroad and airline stocks gained, pushing the Dow Transportation (up 38.39 to 3,180.24, Charts) index, which includes component Yellow Roadway, up 1.2 percent.

Among other movers, shares of Netflix (NFLX: up $1.05 to $15.41, Research, Estimates) and Tivo (TIVO: up $0.66 to $5.08, Research, Estimates) both rallied after Newsweek magazine said that the two were close to a deal that would let Netflix subscribers download movies online to their TiVo digital video recorders.

Texas Instruments (TXN: down $0.47 to $18.71, Research, Estimates) declined ahead of its midquarter update, due after the close Wednesday. Credit Suisse First Boston put out a note Tuesday saying the company may lower estimates during its update, which would not be surprising after Intel (INTC: down $0.16 to $19.89, Research, Estimates) did just that last week.

Lehman Brothers downgraded Intel and National Semiconductor (NSM: down $0.75 to $12.42, Research, Estimates) to "equal weight" from "overweight" due to weaker demand for computer chips. Both shares declined.

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Hyman said that the technology sector's continued underperformance is the one big negative out there that could undermine the current rally.

Discount retailer Rite Aid (RAD: down $0.85 to $3.70, Research, Estimates) fell nearly 19 percent and topped the New York Stock Exchange's most-actives list, after warning that full-year revenue and earnings per share will miss estimates, due to weaker pharmacy sales.

Volume was improved from recent weeks but still light. Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than 12 to five as more than 1.20 billion shares changed hands. On the Nasdaq, advancers topped decliners by more than three to two on volume of 1.31 billion shares.

COMEX gold fell $3.10 to settle at $399.40 an ounce.

Treasury prices gained, pushing the 10-year note yield down to 4.24 percent from 4.29 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen and euro.