Fear Takes a Holiday

Investors traded in fear for optimism Tuesday as the market's thorniest patches delivered positive nuggets. But most traders weren't extrapolating much from swings in this holiday-shortened, pre-earnings season week.

Major stock market indices surged Tuesday as crude oil prices fell, the dollar rose, chain stores reported a strong week and pending home sales improved. Even the sector everyone loves to love, technology, rallied Tuesday as Internet favorite Google(GOOG Quote) soared 3.1% on Goldman Sachs' upgrade and its announcement of a foray into television in partnership with satellite company EchoStar(DISH Quote). EchoStar jumped 1.2%.

The Nasdaq Composite led the three major indices Tuesday, gaining 1.1% to close at 2450.33. The Dow Jones Industrial Average jumped 1%, or 128 points, to close at 12,510.30. The S&P 500 gained 0.9% on the day to close at 1437.77.

The cost of a barrel of light, sweet crude fell abut 1.9% Tuesday to close at $64.64. Traders attributed the drop to profit-taking and to some easing of tensions over the hostage situation in Iran.

"It is telling that people are easing back on their fears," Marc Pado, chief market analyst at Cantor Fitzgerald says of the advance. But he warns that earnings will set the tone for the market in the second quarter, not "a day like today when you erase some of the fears about oil."