Stocks rally ahead of Fed decision

Stocks moved higher Tuesday with the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) each rising for a fifth straight day thanks to a big rally in technology stocks, but hopes for a resolution of the fiscal cliff crisis faded in the afternoon and trimmed the market's gains.

Apple (AAPL) was one of the main fuels for the rally, rising $11.42 to $541.24. On Monday, the shares dropped to as low as $521.58 in the morning but rebounded a bit in the afternoon. The rebound continued Tuesday.

Apple's surge pushed the Nasdaq Composite Index ($COMPX) to its biggest one-day gain in more than two weeks, and the index moved into positive territory for December. The technology sector of the S&P 500 was the index's strongest.

The Dow closed up 79 points to 13,248. The S&P 500 was up 9 points to 1,428, and the Nasdaq added 35 points to 3,022, its first close above 3,000 since Dec. 3. The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was up 35 points to 2,682. In addition, expectations that the Federal Reserve will affirm its commitment to support the economy in the event budget talks fail also was a factor. The Fed will announce its policy for the next two months on Wednesday.

The Fed is widely expected to reconfirm its expectation that interest rates will remain at ultra-low levels until mid-2015.

It is also expected to announce it is converting a program popularly known as Operation Twist into a broader bond-buying program that the media will call QE 4.

QE is short for quantitative easing, which essentially means the Fed buys outstanding government debt, helping to keep rates low. The bond-buying program, the Fed's 4th since the 2008-2009 market crash, have been the central bank's main tools for keeping rates low.

Twenty-six of the 30 Dow stocks were higher, along with 367 S&P 500 stocks and 82 Nasdaq-100 stocks.

In addition to Apple's gain, a number of big tech companies saw shares rise nicely, including Research In Motion (RIMM), Texas Instruments (TXN), Google (GOOG), Intel (INTC) and Amazon.com (AMZN).

Discount retailers were hurt by a note of caution about the holiday shopping season from Dollar General (DG), which was off $3.63 to $42.90.  The company was worried about  intensifying competition this holiday shopping season.

Family Dollar Stores (FDO) fell $5.90 to $64.68 while Dollar Tree (DLTR) fell $1.46 to $37.98.

Wal-Mart Stores (WMT) was off $1.26 to $70.89 and was the weakest of the 30 stocks. Target (TGT) dropped 53 cents to $61.43.

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