U.S. Stocks Rebound; Dow Up More Than 200 Points

NEW YORK (MarketWatch) -- U.S. stocks surged higher Tuesday afternoon, with the Dow adding more than 200 points on word that Apple Inc. is in talks to sell the iPhone in China and an outlook from Goldman Sachs that helped appease market jitters about the credit crisis.

"We're buying what has been beaten down and selling what was winning," said Peter Boockvar, equity strategist at Miller Tabak. "We're bottom-picking the financials on a sigh of relief that no shoes, or news, dropped at the Merrill [Lynch] conference," Boockvar said of the financial services event at which Goldman Sachs' chief executive spoke.

"The question is not whether we're getting a bounce and everything is fine; the question is whether this is just a one-day event. It's not today that is most important, but whether there is any follow through," Boockvar said.

The Dow Jones Industrial Average extended its gains in afternoon trade, climbing 235.7 points, or 1.8%, to 13,224.8 with 26 of its 30 components trading higher, led by Wal-Mart, recently up 6.9%.

The S&P 500 gained 27.22 points, or 1.9%, to 1,466.40

The technology-heavy Nasdaq Composite advanced 60.94 points, or 2.3%, to 2,645.07, fueled by a rebound in tech stocks; shares of Apple Inc. were up more than 9.6% after China Mobile Ltd. disclosed talks to bring the iPhone to China. VMware Inc. shares gained 12.6%.

Sectarian rise

Financial stocks also advanced, helped by Goldman Sachs CEO Lloyd Blankfein telling a New York conference that the Wall Street powerhouse would not be taking any significant charges to write off losses on its subprime mortgage market position.

Drug stocks also moved higher, as Nektar Therapeutics jumped, recently up 5.7%, following news Pfizer Inc. would pay Nektar $135 million for discontinuing sales of their jointly developed insulin product Exubera, which has posted anemic sales.

Shares of Pfizer gained nearly 1%.

Energy stocks were mixed, with the Amex Natural Gas Index up 0.05%, and the Amex Oil Index down almost 1.2%.

Shares of Exxon Mobil Corp. fell 0.9%, coinciding with a larger, 3.4% drop in the price of crude-oil futures, recently down $3.12 to $91.50. .

Gold futures fell, recently off $8.20 at $799.50 an ounce. .

The dollar gained on the yen but slipped against other major rivals, with the greenback buying 110.34 yen, compared with 109.38 yen late Monday. The euro was at $1.4593, compared with $1.4530 Monday. .

The benchmark 10-year note was down 8/32 at 100, its yield up to 4.25%. .

More than 988 million shares traded on the New York Stock Exchange, and advancing stocks outran those declining more than 3 to 1. On the Nasdaq, 1.7 billion shares exchanged hands, and advancing stocks topped declining issues 2 to 1.

Big-box retailers

Wal-Mart's near 8% profit growth in the third quarter topped analysts' estimates, with results from the globe's biggest retailer indicating that heavy discounts during the period did not dent margins, a positive signal for the remainder of the year. .

While Wal-Mart's results offered a glimmer of hope to investors, one analyst believes Wall Street might be reading too much from them.

The numbers "slowed improvements because of cost-cutting, not because of huge increased sales," said Michael Farr, president of Farr, Miller & Washington. .

Home Depot Inc. reported third-quarter income dropped an expected 27% amid ongoing weakness in the housing market. The nation's biggest home improvement retailer also cut its forecast for the year.

Weekly chain-store sales last week rose 2.7% from a year-ago, but fell 0.5% from the week before, according to the International Council of Shopping Centers and UBS Securities.

For the month, ICSC expects industry same-store sales to increase by about 2.5%.

Vodafone Group PLC just beat consensus forecasts in reporting its return to profit n the first half of the fiscal year, with the world's top mobile operator by revenue also lifting its annual outlook. .

Overseas, European shares moved off their lows in afternoon trade, as gains for telecom shares in the wake of Vodafone's well received earnings. .

Asian markets ended on a mixed note after a volatile session sent several indexes swinging between positive and negative territory. .

Stocks were due for a reversal after a volatile session Monday, which had the Dow moving up more than 100 points before closing below the 13,000 level for the first time since the middle of August.

By Kate Gibson