Cisco Systems (NASDAQ: CSCO) had good news for technology investors late Tuesday, posting better than expected earnings and revenues and suggesting that the downturn may be shorter than feared.

Cisco said its July quarter sales grew a better than expected 10% to $10.4 billion, and earnings of 40 cents a share were a penny better than analysts anticipated.

The critical U.S. enterprise market grew 13%, more than double the previous quarter's performance. The company forecast growth of 8-8.5% for the next two quarters, slightly lower than expected, but comments from CEO John Chambers that the downturn will likely be a "relatively short challenge going forward" cheered investors worried about a prolonged downturn.

Cisco shares rose 3% in late trading, on top of a 3% gain during the day.

Routing and advanced technologies sales were strong, but Cisco said service provider spending remained mixed.

Also in late trading, Priceline (NASDAQ: PCLN) tumbled 17% despite beating estimates.

Stocks surged during Tuesday's trading session on falling oil prices and a better than expected services sector reading — and a Federal Reserve interest rate policy statement that was more market friendly than traders had hoped for.

The Nasdaq rose 2.8%, and its biggest names posted gains of 3% or more, including Microsoft (NASDAQ: MSFT), Intel (NASDAQ: INTC), Oracle (NASDAQ: ORCL), Sun (NASDAQ: JAVA) and Apple (NASDAQ: AAPL).

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But Rackable Systems (NASDAQ: RACK) plunged 16% after missing estimates.

The Nasdaq surged 64 to 2349, the S&P gained 35 to 1285, and the Dow soared 331 to 11,615. Volume rose to 5.51 billion shares on the NYSE, and 2.43 billion on the Nasdaq. Advancers led by a 25-8 margin on the NYSE, and 19-9 on the Nasdaq. Upside volume was 81% on the NYSE, and 86% on the Nasdaq. New highs-new lows were 56-114 on the NYSE, and 61-115 on the Nasdaq.