Investors drove an impressive rally in New York on Tuesday; they're now betting the Federal Reserve will cut interest rates next week; another round of upbeat news from technology companies also drove the results.

Bad news however, just keeps coming in from the housing sector. The National Association of Realtors says it now expects a 3.7 per cent drop in existing home prices in the third quarter compared to a year earlier. And the fourth quarter should see prices down 1.3 per cent from a year ago. Both estimates are higher than previously expected.

In other economic news, the trade gap narrowed slightly in July to $59.2 billion, down from $59.4 in June according to the Commerce Department.

Taking a look at the numbers; Dow Jones Industrials rallied 181 points to 13,308; the S&P500 gained 20 points ending at 1,471, and the Nasdaq added 38 to finish at 2,597.

In company news, is PepsiCo. Shares in the soft drink maker were up 2.06% to $69.87 after Goldman Sachs upgraded its stock to "buy" from "neutral". Goldman Sachs actually raised its 2008 estimates for all US soft drink companies by anywhere between 1 and 4 per cent based on moderately lower aluminum and corn costs.

And shares in Mcdonald's were up 3.21% to $51.76. The world's biggest restaurant company reported just over an 8 per cent rise in August same-store sales, beating market expectations. Strong breakfast and beverage sales in the US and extended store hours in China and here in Australia helped drive the results. The numbers stand in stark contrast to recent weak results posted by many other restaurant chains.

The health sector got a boost from ImClone Systems. Shares in the biotech company soared 18.38% to $44.90 after news one of its drugs improves overall survival in lung cancer patients. The results from the clinical trial came as a surprise; investors had lowered their expectations following disappointing results from an earlier study released in July.

And finally, shares in Western Digital climbed 4.42% to $23.40. The world second-largest computer hard drive maker raised its fiscal first quarter forecast due to improved demand, pricing and product mix. Western Digital is the latest in computer maker to give an optimistic outlook for the coming weeks and months, following Seagate Technology, Dell and Cisco Systems

Turning to the best and worst performers in the Nasdaq Top 100. Topping the list of winners was Wynn Resorts which was up 6.37% to $131.70. Amgen and Telefon AB LM Ericsson round out the top three.

Meanwhile Dentsply fell by 2.55% to $40.13. Liberty Global and Intuitive Surgical also performed poorly.