Wall Street gains after two-day drop; tech shares rise

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks rose on Tuesday after a two-day decline, helped by gains in technology shares.

But the market was well off its highs for the session, with shares of homebuilders falling broadly after KB Home forecast a drop in gross margins for the first quarter. Homebuilder stocks had been up earlier in the session, but KB Home was last down 13.7 percent, while a housing index was down 0.9 percent.

The S&P technology sector was among the day's best performers, with a 1.3 percent gain. Apple shares were up 2 percent and among the most actively traded on Nasdaq after Credit Suisse upgraded the stock to outperform, citing increased projections for iPhone sales in fiscal 2015 and 2016.

Alcoa Inc shares were last down 1.4 percent, also having reversed earlier gains. The company late Monday reported a higher-than-expected quarterly profit due to automotive demand, higher aluminum prices and lower energy costs.

The benchmark S&P index has fallen in seven of the prior nine sessions and is down about 2 percent from its most recent record high on Dec. 29.

"We have reached a point over the last two weeks where investors are not only eager for earnings season because of its fourth-quarter focus, but they are also eager for the guidance forward which has largely evaporated in this cloud of the oil trade," said Peter Kenny, chief market strategist at Clearpool Group in New York.

At 12:59 p.m., the Dow Jones industrial average rose 137.5 points, or 0.78 percent, to 17,778.34, the S&P 500 gained 12.38 points, or 0.61 percent, to 2,040.64 and the Nasdaq Composite added 45.53 points, or 0.98 percent, to 4,710.24.

Financials including JPMorgan Chase & Co, Wells Fargo & Co, Goldman Sachs Group Inc and Citigroup Inc are also among the companies due to report this week.

Fourth-quarter earnings are expected to show growth of 3.7 percent over the year-earlier period, according to Thomson Reuters data, down from the 11.2 percent growth expected on Oct. 1, which may result in more companies topping forecasts.

Brent and U.S. crude touched their lowest levels in almost six years as a big OPEC producer stood by the group's decision not to cut output.

Goodyear Tire & Rubber stumbled 6.8 percent after the estimated full-year operating income growth "slightly below" its forecast of 10 to 15 percent.

Advancing issues outnumbered declining ones on the NYSE by 1,841 to 1,181, for a 1.56-to-1 ratio; on the Nasdaq, 1,597 issues rose and 1,074 fell, for a 1.49-to-1 ratio favoring advancers.

The benchmark S&P 500 was posting 57 new 52-week highs and 14 new lows; the Nasdaq Composite was recording 108 new highs and 55 new lows.

(Additional reporting by Chuck Mikolajczak; Editing by Lisa Von Ahn and Nick Zieminski)