Bin Laden Tape Undercuts Rally

Evidence that Osama bin Laden may be alive cut short a strong rally on Tuesday.

The Nasdaq surged 30 to 1349, the S&P 500 added 6 to 882, and the Dow rose 27 to 8386, 118 points off its high for the day. Volume rose to 1.34 billion shares on the NYSE, and 1.56 billion on the Nasdaq. Advancers led 19 to 12 on the NYSE, and 20 to 12 on the Nasdaq. Upside volume was 67% on the NYSE, and 90% on the Nasdaq. New highs-new lows were 21-41 on the NYSE, and 32-52 on the Nasdaq.

After the close, Network Appliance and Sycamore matched estimates.

During the day, better than expected results from Vodafone boosted European markets and lifted wireless stocks.

Cisco rose 5.8% as analysts debated whether the company’s comments on order backlogs were positive or negative. Salomon Smith Barney claimed there was nothing new in CEO John Chambers’ comments, and that orders remain below target.

Oracle gained 5% after saying that growth will return next year. The company also got a boost from the OracleWorld conference. EMC , up 7%, also presented at the conference.

Internet Security gained 9% after discovering a DNS security flaw and on Congressional approval of a $903 million security bill.

AOL managed a small gain despite the departure of online chief James de Castro.

Yahoo gained 3.8% despite competition from MyWay.

IBM , up 2.4%, tweaked integration software pricing as the company continues to move toward a utility or “on-demand” computing model.

Microsoft , up 1.2%, will offer “smart displays” in stores next year.

Corning surged 20% after selling a unit to 3M.

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